NZD/USD remains sidelined near 0.7040 even as China posts first consumer price deflation since 2009
- NZD/USD trades in a sideways manneer, having formed an indecisive Doji candle on Tuesday.
- China's CPI posts first year-on-year decline in over a decade.
- PPI or factory-gate deflation eased in November.
Data released soon before press time showed China suffered a year-on-year decline in the Consumer Price Index (CPI) in November, the first in over a decade, alongside continued deflation in factory-gate prices. So far, however, the data has failed to have influence the commodity-sensitive New Zealand dollar, leaving NZD/USD in stasis near 0.7040.
The CPI fell 0.5% year-on-year in November, missing the forecast of 0% and down from the previous month's 0.5% rise. Meanwhile, the Producer Price Index (PPI) fell by 1.5% in annualized terms vs. -1.8% expected and -2.1% previous.
Weak inflation points to weakness in the world's second-largest economy. However, according to Bloomberg, the deflation in consumer prices is likely to be short-lived and has a limited monetary policy impact. That explains the NZD's muted reaction.
The NZD/USD market looks to have turned indecisive, having created a Doji candle for the second straight day on Tuesday. Monday's high of 0.7064 is now the level to beat for the bulls, while Monday's low of 0.7006 is a key support.
Risk sentiment has soured this week due to renewed Brexit concerns. As such, a move below Monday's low of 0.7006 cannot be ruled out.
Technical levels