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  
Global equities hit by bearish pressure

Global markets took a sharp U-turn as the markets were in turmoil on the back of large crypto currency sell offs caused by regulation fears and a crackdown...

Dollar stabilizes after four days slide

The greenback’s sell-off paused early Tuesday after touching its weakest level since January 2015. Traders have been selling the buck across the board...

US equities hit another record high

The US markets have continued their hectic pace this year as the S&P 500 reached new highs on the back of economic figures. These figures showed...


Fixed income markets to dominate FX

The outstanding performance for equities which sent many major indices to record highs may have just paused. Asian stocks were trading broadly lower...

How longer the tired bull will keep running?

Led by Wall Street, global equity markets continued to enjoy one of their best starts in eight years. The Japan’s Nikkei 225 marched to a new 26-year high...

Critical week for dollar after a fragile start

After having the worst annual performance since 2003, the dollar continued to struggle in the first trading week of 2018. The dollar index fell to...


Robust economic growth

Equity investors across the globe are finding no reasons to take profits after an excellent performance in 2017. Asian stocks are trading at record highs after...

FOMC minutes - Will dollar bulls attack?

Investors kicked off 2018 on a positive note sending U.S. stocks to fresh highs on the first trading day. The optimistic approach on day one was...

Equities reaction on tax breakthrough

Asian markets woke up on Thursday to the news that Republicans had passed the long-awaited tax bill. President Trump is now just a pen...

  


Share: