The Kiwi dropped against the US Dollar as softer-than-expected Q3 inflation data cooled market expectations for aggressive monetary tightening in New Zealand.
The New Zealand Dollar weakened against the US Dollar following the release of Q3 CPI data, which showed inflation at 3.7% YoY, missing the 3.8% forecast. This softer-than-expected inflation print reduces the likelihood of aggressive monetary tightening by the Reserve Bank of New Zealand, causing the currency to retreat from its recent four-week peak.
The data came in lower than expected, which reduced rate hike expectations and caused the NZDUSD to fall from a four-week high.
The CPI was a tenth of a percentage point below the forecast for both the quarterly and annual measures.
The New Zealand Dollar retreated from a four-week high after third-quarter inflation data missed expectations. The CPI rose 3.7% year-on-year, falling short of the 3.8% forecast, which eased pressure on the Reserve Bank of New Zealand to pursue further rate hikes.
The currency fell because Q3 inflation data came in lower than expected, signaling less urgency for the central bank to maintain a hawkish monetary policy.