NZD lifts on RBNZ interest rate pause

22 September, 2016

NZD lifts on RBNZ interest rate pause

The New Zealand dollar has managed to pause in the wake of the recent Reserve Bank of New Zealand interest rate statement, as the RBNZ has held interest rates flat at 2.00%. This was for the most part expected in the long run as the current economic data had been relatively positive, and we had recently seen a boost in commodity prices which would carry over into the domestic economy. It's however hard to justify further rate cutting in the near future, if we do see further rises in the economic data and pressure on inflation it could be a case of the RBNZ reversing their tune very rapidly, and I would anticipate with the lift in commodity prices could add this pressure that has been missing. The final move from the RBNZ during the meeting was to try and jawbone the currency, but the market was in no mood as it has heard it time and time again when it comes to central bank policy.

The NZDUSD has so far paused and provided little in the way of movement in the wake of the RBNZ announcement. Resistance levels at 0.7375 have so far held back any higher highs, but the reality is that we could see further pressure for the currency to lift higher than it currently is, as jawboning has failed miserably from the RBNZ and I feel that the outlook is still quite positive for the NZ economy. The next level of resistance is at 0.7401 and is likely to be a tipping point before the major level at 0.7475 which I would be surprised to see the NZDUSD move beyond.

US markets are still struggling to understand the motives of the Federal Reserve after the recent speech from Yellen was very hawkish but failed to offer any real hints as to what the future might hold. This seems like further rhetoric from the FED in the face of mixed economic data, but some key elements were gleamed from the ensuing press conference where she outlined that the FED did not have to worry too much about inflation at this stage. Yellen went on further to add "if we continue on the course for jobs without and shocks, I expect a hike this year" - this was the most hawkish statement and holds the course for an expected rate rise in the near future, but the market is still cautious about the reality of this given the dovish nature of the FED in previous years.

The market was quick to react when it takes a dovish feel of things and the S&P is no stranger to the volatility of the FED in recent teams as the bulls leapt on the chance to grab some ground after a month of volatility. Resistance is likely to be found at 2164 at this stage, and it will be interesting to see if further momentum can be found in the market at present, or if the market will indeed accept a hawkish fate and look to slip lower in the long run. 


Source link  
Central bankers, Euro and UK GDP

Asian shares were depressed on Monday morning, as investors remained guarded amid lingering concerns over U.S. tax reforms. The caution from Asia...

US tax bill send equities soaring

The Tax bill has been talked about for some time, and today was the day for it. Obviously, it cleared the US house easily enough and is now...

Equity markets looking unhinged

It should be all good news for global equity markets at present as the global recovery continues to tick along nicely. So far profits are up and the market...


Steep equity correction is underway

2017 has seen many hedge fund and portfolio managers send warning signals that an equity market correction is overdue. Overstretched valuations...

RBNZ set for change on new mandate

The New Zealand government continues to be in the eye of traders as the current changes to the Reserve Bank of New Zealand look to be...

Brent touches a new 2-year high

Oil prices continued to march higher on both sides of the Atlantic early Monday. In the early trading hours, Brent reached a high of $62.44...


US feels Trump effect wearing off

Trumps tax plan seems to be going well in Congress with Republicans continuing to offer support, even though it will produce a deficit in the short...

Markets searching for new catalysts

U.S. equity investors have decided to pull out some profits on Monday, after Wall Street’s major indices posted new intraday records at the opening...

Oil primed to jump

Oil markets have been volatile in 2017 and not the one way traffic we saw in 2016. The market has been responding to a variety of factors, the main one being the glut...

  


Share: