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NZD/USD strengthened before NZ inflation report

NZDUSD1New Zealand dollar advanced against its US peer on Friday before a report next week, that may show inflation rate in New Zealand rose to the highest level in 1.5 years.

NZD/USD rose to a session high at 0.8354 at 9:25 GMT, after which consolidation followed at 0.8342, climbing 0.71% for the day. Support was likely to be found at October 10th low, 0.8232, while resistance was to be encountered at September 24th high, 0.8360.

Statistics New Zealand will release a report, which may reveal that nation’s consumer price index (CPI) climbed 1.2% during the third quarter of this year compared to Q3 2012, according to the median estimate of economists participated in a survey by Bloomberg News. The official data is scheduled for release on October 16th. If results meet expectations, that would be the fastest pace since Q1 2012. “Risks for the New Zealand dollar stemming from the CPI are probably weighted to the upside,” Citigroup Inc. analysts including Richard Cochinos, head of Americas Group of 10 foreign-exchange strategy, wrote in an e-mailed note to clients today, cited by Bloomberg. “A stronger-than-expected reading would point to somewhat less scope for RBNZ patience in raising interest rates.”

Another important signal for the kiwi may come with the release of data on Chinese trade balance, as China is New Zealands second largest export market. The import figure probably rose 7% in September on annual basis, after recording the same rate of increase during the previous month, according to the median estimate of experts participated in another survey by Bloomberg News. The official report is scheduled for release tomorrow.

Also, traders saw a 77% probability that the Reserve Bank of New Zealand (RBNZ) will increase its benchmark interest rate from the current record low level of 2.50% to 2.75% or higher by April next year.

Meanwhile, Republican House Speaker John Boehner’s proposal and President Obama’s willingness to continue debating marked the first serious negotiations between the two parties to find a solution to the US budget crisis and end the partial government shutdown. The White House released a statement in which said that “no specific determination was made” and that the two sides discussed the “potential paths forward” during the 90-minute meeting.

Elsewhere, the kiwi dollar was pushing higher against the Aussie, with AUD/NZD cross falling 0.52% on a daily basis to trade at 1.1357 at 11:51 GMT.

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