Kiwi falls as further easing prevails

10 September, 2015

As we fret on whether the Fed will raise rates and wonder about the Bank of England, it’s nice to see some central banks are still managing to cut rates. Overnight, it was the Reserve Bank of New Zealand, where rates were cut by a largely anticipated 25bp to 2.75%. The kiwi dropped sharply as a result, from 0.64 to 0.6275 now. This continues the easing cycle started in June of this year, as the central bank has tried to boost the economy, troubled by lower commodity prices and weaker demand. The central bank governor was also leaving the door open for further easing, hence the fall in the currency. Rates are still some way above the prevailing rates in Australia (at 2.0%), so at least from a relative perspective, the scope for further easing remains fairly compelling, especially given the wider global situation.

Also overnight, the latest data from China has shown headline inflation rising more than expected, up to 2.0% (from 1.6%), although PPI (more the price of goods) fell to -5.9% YoY. The latter still suggests that there is more trouble ahead of China and downward pressure on the headline inflation rate. Meanwhile, the Aussie received some support from better than expected labour market data. The headline unemployment rate was steady at 6.2%, but the employment measure showed better than expected growth in jobs, which pulled the Aussie back about the 0.70 level. A sustained push above this level looks difficult at this time though. The Bank of England decides on rates today, with the minutes and votes published at the same time (a new development as of last month). This gives scope for greater sterling volatility, with main focus being on whether the one vote for higher rates seen last month is removed on the back of the recent concerns regarding China and the global economy.


Source link  
CB Monetary Policy Unchanged

Thursday saw the latest Monetary Policy Committee (MPC) report from the Bank of England. The BoE stated that further modest increases...

No Surprises as Fed Raises Rates

The Federal Reserve, as expected, raised its benchmark interest rate by a quarter of a percentage point, to a range of 1.25% to 1.5%. The latest hike...

CB meetings dominate the week

With no impactful economic data releases on the calendar today, the markets are focusing on a plethora of Central Bank meetings scheduled...


No Surprises from BoC & ADP

In an unsurprising move, the Bank of Canada decided to hold its benchmark lending rate at 1%, after two small hikes earlier in 2017. The BoC stated...

Moderate Gains for USD

On Monday, the US Commerce Department released Factory Orders data for October, indicating that the continued strength in the Manufacturing...

OPEC Extends Output Cuts

On Thursday, OPEC (Organization of Petroleum Exporters) and non-OPEC producers led by Russia agreed to keep output cuts until the end of 2018...


US Economy Expands Faster Than Predicted

Data released on Wednesday showed that the US economy expanded at its quickest pace since 2014 in Q3. The US Commerce Department said that...

Political Turmoil in Germany Hurts EUR

The EUR lost ground against many of its peers on Monday on news that Chancellor Angel Merkel’s efforts to form a coalition government had collapsed...

USD Suffers on Subpoena News

The Trump Administration is back in the spotlight with news of a report that Special counsel Robert Mueller’s investigators have issued a subpoena...

  


Share: