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NZD/USD trading - Producer Price Index - 20 Feb 2017

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NZD/USD trading chart 20 Feb 2017
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New Zealand producer price index points to stronger inflation

Producer price index data from New Zealand released during the overnight trading session showed that after years of inflation evading the central bank's target threshold, there was signs that prices at the factory gate were rising. This comes on top of the previous quarter's inflation reported which showed evidence of inflation firming even further and moving closer to the RBNZ's inflation target band.

Producer price index data - fourth quarter of 2016

Producer price index data showed that during the fourth quarter of 2016, inflation at the factory gate rebounded 2.5% on an annual basis which includes both input and output basis. This was a strong beat, compared to the 0.1% increase registered in the previous quarter.

The official data also showed that the 2.5% increase covered the entire economy and not just one part of the industry. The positive data however failed to provide support to the NZDUSD which fell at the open today.

The RBNZ's comments on interest rates are still fresh in traders' minds as the central bank signaled that it was in no hurry to hike interest rates but instead said that it was concerned with the appreciation in the NZD's exchange rate. This sent the Kiwi lower as the central bank quashed any hopes of a near term increase in rates.

How we trade binary?

NZDUSD is seen currently retracing some of the gains to the upside and price action is likely to hit resistance near 0.7217 - 0.7207. Therefore, purchasing daily PUT options near this resistance level for a 21:00 GMT expiry time will see NZDUSD potentially reversing the day's gains and resuming the downtrend. Traders should bear in mind that with the U.S. markets closed today, trading is expected to remain light and could result in choppy price action.

Asset: NZD/USD
Direction: Put
Target price: 0.7207
Expiry: 21:00 GMT

Disclaimer: The article is written for informative purposes only and it is not financial advice. The author does not have any position in the currency pairs mentioned, and no plans to initiate a position. He wrote the article himself and expressed his own opinions. He has no business nor personal relationships with any mentioned government entities or stocks. Readers should not treat any opinion expressed by the author as a specific inducement to make a particular trade or follow a particular strategy, but only as an expression of his opinion.

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