New Zealand Dollar declines vs US Dollar after US CPI beat

The New Zealand Dollar takes another step lower against the US Dollar on Tuesday after both headline and core US CPI for February came out above estimates, according to data from Bureau of Labor Statistics (BLS). 

The US Consumer Price Index ex Food and Energy (core) inflation came out at 3.8% YoY when analysts had expected a 3.7% result. The figure was lower than the 3.9% recorded in January, however, suggesting inflation is coming down, only not as quickly as forecast.  

On a monthly basis, core CPI rose 0.4%, which was higher than the 0.3% forecast and  equal to the 0.4% recorded in January.  

The broader headline CPI figure showed an unexpected rise of 3.2% YoY against the 3.1% forecast. This was also higher than the 3.1% recorded in January. 

On a monthly basis headline CPI rose 0.4%, which was in line with estimates and higher than the 0.3% registered in January. 

According to the CME FedWatch Tool, which calculates a market-based expectation of when the Federal Reserve will begin reducing its Fed Funds Rate, the probability of a first rate cut in March has fallen to 1% from 3% prior to the CPI release. The chance of one or more 25 bps cuts by May is now 16.8% from 17.1% prior to the CPI release. The probability of one or more interest rate cuts by June is now 69.7% from 71.4% prior to the data