While the Yen is getting battered against all currencies on the grounds that the Japanese government wants that to be so, the Kiwi is rallying. Governor Wheeler at the RBNZ has been the main catalyst for this appreciation. All week the market has heard hawkish comments come from his office.
On Wednesday, the RBNZ chose to leave the OCR unchanged at +2.5%. The Governor is bullish about New Zealand’s economy, saying “economic indicators are improving here and with many of our trading partners” and “positive global sentiment is resulting in lower bank funding costs and reduction of credit costs for both households and firms alike.”
The Governor “does not want to see financial stability of inflation risks accentuated by housing demand getting too far ahead of supply.” The central banks’ own analysis suggests that GDP growth is recovering, as business confidence and construction activity has picked up, while inflation is subdued due to “overvalued New Zealand dollar.”
In other words, policy makers do not want to adopt “loose monetary policy for fear of inflation”. Despite the weak labor market, the Kiwi’s economy is strengthening even without policy makers doing anything.
Such language is giving market participants the confidence to own more of the currency.
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* AUD Reserve Bank of Australia Rate Decision
* EUR Euro-Zone Retail Sales
* AUD Unemployment Rate
* GBP Bank of England Rate Decision
* GBP BOE Asset Purchase Target
* EUR European Central Bank Rate Decision
* CNY Consumer Price Index
* EUR German Consumer Price Index
* CAD Unemployment Rate
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