NZ CPI [q/q]
Features of the publication
How to trade NZ CPI [q/q]
Trading pair NZDUSD grows if the data are released above the forecasts.
The report contains a set of New Zealand inflation data both in quarterly terms and in annual terms. Our trading goal is quarterly CPI q/q data, as they are published first, and the primary market reaction will come from the quarterly CPI.
The most unstable part of this indicator is the annual CPI y/y indicator, which is published after the quarterly indicator. As such, for extra small deviations of the headliner (quarterly), we have a chance to see a stop of the initial reaction of quotations if the quarterly data are not supported by the annual report.
Sometimes, we can observe the sharp movement of the market before the release – this requires attention! A sharp market movement burns the anticipated reaction at the time of release, which reduces the chances of a continued movement from the indicator. It is better to switch to higher triggers in such moments, and sometimes completely abandon trading. Fortunately, the indicator usually arrives on time, but it's worth keeping your hand on the pulse of events.
Traditional risks remain for the trading pair NZDUSD. Since the news is published in a low-liquid trading time, we can get an additional spread growth and additional slippage, although NZ CPI q/q retains its status of a good trading indicator.