The New Zealand dollar fell in European trade against dollar for the second session, plumbing five-week lows after data showed New Zealand inflation slowed down in the first quarter of the year. 

The dip in inflation and housing prices reduces pressure on the Reserve Bank of New Zealand and hurts chances of another rate hike this year, and boosts the odds of actual rate cuts later this year.

The kiwi last fell 0.8% against US counterpart to 0.6149, the lowest since March 16, with a session-high at 0.6206. 

The New Zealand dollar fell 0.15% yesterday against US counterpart, the third loss in four days as housing prices tumbled. 

Inflation

Government data showed New Zealand's consumer prices rose 6.7% y/y in the first quarter of the year, below estimates of 7.1%, and down from 7.2% in the previous quarter. 

Such data boosts the odds of a turn in monetary policy this year towards easing rather aggressive tightening. 

New Zealand Rates

The RBNZ already raised interest rates 11 times since October 2021 to 5.25%, the highest  since 2008.

And at the April 5 meeting, the RBNZ raised rates by 50 basis points for a second time in a row, passing estimates of a 0.25% hike. 

The RBNZ warned that higher short-term inflation weighs on inflation outlook and threatens price instability, however markets now expect the RBNZ to reverse policies as consumer prices slow down. 

Estimates

JPMorgan analysts said the downside aspects of the kiwi are due to the housing sector decline, which is rather crucial to the forex markets, in turn weighing considerably on the New Zealand dollar. 

Sterling rose against most major rivals following unexpected inflation data in the UK.

UK data showed consumer prices rose 10.1% in March, compared to a 10.4% increase in February, while analysts expected a 9.8% drop.

UK data also showed wages grew less than expected in the three months ending March.

Such data explain why Bank of England remains on a path of aggressive policy tightening and rate hikes to control inflation.

On trading, GBP/USD rose 0.1% as of 19:34 GMT to 1.2438. 

Loonie

CAD/USD fell 0.5% to 0.7430 as of 19:39 GMT. 

Aussie

AUD/USD fell 0.2%% to 0.6718 as of 19:39 GMT. 

Greenback

The dollar index rose 0.2% to 101.9 as of 19:30 GMT, with a session-high at 102.2, and a low at 101.6. 

Investors continue to monitor latest corporate earnings results for the first quarter of the year. 

US stock indices declined on Wednesday as markets follow latest corporate results closely for the first quarter. 

Netflix reported mixed results yesterday, with below-forecasts earnings in the first quarter. 

Later today, famed electric car manufacturer Tesla will release its first quarter results. 

The Fed

Atlanta Fed President Raphael Bostic said the Federal Reserve still needs to increase interest rates by 25 basis points in May.

He said after such a decision, the Fed might cease any such moves and hold rates for a long term as it assess the policy's impact on the economy. 

On trading, Dow Jones fell 0.3%, or 99 points to 33,877 as of 15:05 GMT, while S&P 500 declined 0.2%, or 10 points to 41,45, as NASDAQ slid 0.3%, or 96 points to 12,117. 

Nickel prices fell mildly on Wednesday as the dollar rose against most major rivals while investors assess latest US inflation data and its impact on the Federal Reserve's policy decisions.

Chinese Economy

Official data showed Chinese GDP grew by 4.5% in the first quarter of the year after authorities moved to ease Covid 19 restrictions and open up the economy. 

Most analysts expected only a 4% growth rate according to Reuters, compared to 2.9% in the fourth quarter.

On a quarterly basis, Chinese growth came at 2.2% in the first quarter. 

The government put a 5% growth target this year, a rather modest number after missing last year's target by a large margin. 

Following the data, markets expect improvements in demand on industrial metals and commodities. 

Dollar and Fed

Dollar's decline relieves pressure on dollar-denominated commodities such as Nickel as they become cheaper to holders of other currencies. 

Markets are also closely following corporate results for the first quarter of the year, starting with banking results. 

Nickel is used heavily by the car industry for its role in electric car batteries, and it's also used in the steel industry. 

Otherwise, Atlanta Fed President Raphael Bostic said the Federal Reserve still needs to increase interest rates by 25 basis points in May.

He said after such a decision, the Fed might cease any such moves and hold rates for a long term as it assess the policy's impact on the economy. 

The dollar index rose 0.1% as of 14:50 GMT to 101.8, with a session-high at 102.2, and a low at 101.6.

Nickel spot prices fell 1.2% as of 15:01 GMT to $24.6 thousand a tone.