New Zealand’s Kiwi Surges as Rate Cut Bets Pared After CPI Data

(Bloomberg) -- New Zealand’s dollar surged the most in a week after data showed inflation last quarter was stronger than economists had forecast.

The kiwi climbed against all its Group-of-10 peers after a government report Tuesday showed consumer prices rose 0.2 percent from the previous quarter, compared with the median estimate for no change in a Bloomberg survey. The currency rose as much as 0.7 percent to 71.81 U.S. cents. It bought 71.71 cents as of 11:04 a.m. in Wellington.

“Overall the third-quarter New Zealand inflation report reduces odds of more RBNZ rate cuts beyond November which will support kiwi in the near term,” Elias Haddad, a senior currency strategist at Commonwealth Bank of Australia in Sydney said. “A 25 basis point in November is virtually fully priced in our base case scenario.”

Futures were pricing in a 80 percent chance of a rate reduction in November down from 84 percent Monday.

To contact the reporter on this story: Narayanan Somasundaram in Sydney at nsomasundara@bloomberg.net. To contact the editors responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net.