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Kiwi Gets a Boost

9 November 2017

Earlier today the Reserve Bank of New Zealand (RBNZ) left their Official Cash Rate (OCR) unchanged at a record low of 1.75% – as the markets had forecast. More importantly was the RBNZ revising inflation forecasts upwards, which is likely to signal an increase in interest rates earlier than previously predicted. RBNZ acting Governor Spencer stated after the announcement “Monetary policy will remain accommodative for a considerable period,” & “the exchange rate has eased since the August statement and, if sustained, will increase tradables inflation and promote more balanced growth.” The RBNZ had set an inflation target of between 1% and 3% and now expects inflation to reach 2% in Q2 of 2018, a full 3 quarters earlier than previously expected. Because of inflationary pressure, the markets are forecasting a rate hike by the end of next year. Following the announcement, NZDUSD rose from around 0.6922 to just above 0.6970. NZDUSD has suffered in the second half of this year, after reaching a high in July of around 0.7550 the Kiwi slumped to lows around 0.6830 earlier this month. Today’s announcement gives a much needed “boost” to the Kiwi.

Wednesday’s EIA report surprised the markets with an unexpected increase of oil inventories. The markets had been expecting another drawdown around -2.8M that continues a trend seen over the past few releases. For the week ending November 3rd US Crude Oil inventories rose 2.2M as supplies increased, while production jumped to a record all-time high. The major focus is the fact that US production increased 67,000 bpd to 9.62 Million bpd – the highest since data was readily available in 1983. The increase in US production can only undermine OPEC’s supply cuts to boost the price of crude.

At 09:00 GMT, the European Central Bank launches a new publication, the Economic Bulletin, to replace the ECB Monthly Bulletin. It will be published two weeks after each Governing Council meeting.

At 10:00 GMT, the European Commission will release Economic Growth forecasts as compiled by the Directorate General for Economic and Financial Affairs (DG ECFIN).

At 13:30 GMT, the US Department of Labour will release Initial Jobless Claims for the week ended November 3rd and Continuing Claims for the period ended October 27th. The previous release of Initial Claims of 229K is expected to be bettered, with forecasts calling for a release of 232K. Continuing Claims are expected to come in at 1885K, a minor increase on the previous release of 1884K. Any significant deviation from forecast will see USD volatility.

At 15:00 GMT, the UK National Institute of Economic and Social Research will release an estimate of UK GDP. This release occurs 1 month before the official GDP release and could result in GBP volatility.

At 16:30 GMT, Swiss National Bank Chairman Thomas Jordan is scheduled to speak at the CFS Presidential Lectures in Frankfurt, Germany on the subject: “Independence of Central Banks after the Financial Crisis: The Swiss Perspective”.



Scope for dips towards the 0.6793-0.6776 confluence zone
Scope for dips towards the 0.6793-0.6776 confluence zone

A dovish Reserve Bank of New Zealand (RBNZ) policy outcome this week, accompanied by a bloated NZD long positioning sees the kiwi breaking under a protracted...

25 Nov 2021

NZD/USD struggles for direction, flat-lined above mid-0.7100s
NZD/USD struggles for direction, flat-lined above mid-0.7100s

The NZD/USD pair seesawed between tepid gains/minor losses through the early part of the European session and was last seen trading in the neutral territory...

9 Nov 2021

Move beyond 50% Fibo. sets the stage for further gains
Move beyond 50% Fibo. sets the stage for further gains

NZD/USD gained strong traction for the fifth consecutive session on Tuesday. Sustained break through the 0.7100 confluence hurdle favours bullish traders...

19 Oct 2021

NZD: Buy the Rumor sell the fact?
NZD: Buy the Rumor sell the fact?

The RBNZ confirmed a 25-basis-point rate raise, which had been widely anticipated and already factored into the markets. The NZD, however, did not benefit from the boost...

14 Oct 2021

NZD/USD pares intraday gains, up little around 0.6915-20 area
NZD/USD pares intraday gains, up little around 0.6915-20 area

The risk-on impulse provided a modest boost to the perceived riskier kiwi on Thursday. Hawkish Fed expectations acted as a tailwind for the USD and capped gains for the pair...

7 Oct 2021

The Kiwi is falling
The Kiwi is falling

NZDUSD is being sold after the RBNZ meeting. The New Zealand Dollar is falling against the USD. The current quote for the instrument is 0.6880. During its October meeting...

6 Oct 2021

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