NZD/USD Falls After Hot CPI Lifts Dollar; RBNZ Survey Looms

Positioning data had shown a modest net-long speculative position in the kiwi before the data. That left the currency vulnerable to a rapid unwind. The move also reflected a broader repricing of global rate expectations that hit growth-sensitive currencies hardest.

• US core CPI rose more than forecast, trimming rate-cut bets.
• Two-year Treasury yields jumped, widening the rate gap with New Zealand.
• The dollar index surged, and kiwi longs were squeezed.
• The next major catalyst is the RBNZ inflation expectations survey.

For wider positioning context, the weekly Commitments of Traders report often signals speculative flows in the kiwi (see our weekly COT data). The dollar's broad strength was also visible on the currency strength meter, where the greenback outpaced most majors.

RBNZ Survey: The Next Inflection Point

Attention now shifts to the Reserve Bank of New Zealand's quarterly survey of inflation expectations, due in the coming days. The RBNZ has stressed that inflation expectations are a critical input for policy. A meaningful deceleration in two-year-ahead expectations would reinforce the case for rate cuts later in the year. That outcome would add potential downward pressure on the kiwi. A firmer set of expectations could prompt the central bank to maintain its cautious stance, offering a reprieve for the New Zealand dollar.

The survey lands at a delicate moment. Domestic data have been mixed. The labour market is softening. Non-tradeable inflation remains sticky. The RBNZ's own projections do not see a rate cut until mid-2025. Markets have already priced an earlier move. The upcoming reading will either validate that hawkish market pricing or force a reset. The survey is the single most important near-term catalyst for NZD/USD direction.

The 0.6100 level now stands as the next downside pivot. A break below that floor, especially if the expectations survey disappoints, could open the path toward 0.6050. For further context on rate differentials and currency moves, see our forex market analysis.