Kiwi slides on dovish RBNZ meeting

RBNZ to keep expansionary rate climate

At today’s monetary policy meeting, the Reserve Bank of New Zealand opted to keep its official cash rate (OCR) unchanged at 1.75%, a move that had been unanimously expected by analysts.

In the accompanying statement, the RBNZ said it expects to keep the rate at this expansionary level for “a considerable period of time” and monetary policy would remain supportive for some time to come. On inflation, it commented that price inflation remains below target and is only expected to rise gradually. NZD/USD fell to its lowest level in more than 2 years after the announcement with its dovish undertones.

NZD/USD Daily Chart

Source: Oanda fxTrade

Analysts push back rate hike forecasts

Following the announcement, some local economists were quick to adjust their rate forecasts, with TD Securities pushing back its prediction of the first rate hike to May 2019 from February and ASB Bank revised theirs to November 2019 from August. This now matches ANZ’s forecast, which was adjusted earlier in the week.

Confusion reigns supreme

Corporate America gets vocal

In other markets, it’s the same story of trade war threats, counter-threats, moderation and reinforcement which keeps sowing seeds of doubt among investors and keeping risk appetite at bay. Corporate America is starting to voice out against trade war policies as two major auto trade groups warned that carrying through with tariffs on imported vehicles would cost hundreds of thousands of auto jobs and ultimately hurt US consumers. This follows Harley Davidson’s comments that it would consider shifting its manufacturing base overseas.

Yuan pressure eases as the US dollar takes a breather

FX rates were confined to relatively tight bands during the Asian session. Aside from the kiwi’s slide mentioned above, USD/CNH could be poised for its first down day in eleven after touching its highest level since December 13 as USD buying tapered off. EUR, GBP and AUD all managed small-scale bounces off yesterday’s lows, though the yen was still wanted against the US dollar and other crosses.

USD/CNH Daily Chart

Source: Oanda fxTrade

Data Calendar

After a very quiet data day in Asia, the release calendar starts to get busier into Europe and the US. Germany’s GfK consumer confidence is expected to slip marginally in July, Euro-zone confidence indicators likewise are seen marginally low in June from May while the US Q1 GDP revision is not expected to ring any surprises.

For a detailed list of all of today’s economic events, check out our economic calendar at www.marketpulse.com/economic-events/

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Andrew Robinson

Andrew Robinson

Senior Market Analyst at MarketPulse
A seasoned professional with more than 30 years’ experience in foreign exchange, interest rates and commodities, Andrew Robinson is a senior market analyst with OANDA, responsible for providing timely and relevant market commentary and live market analysis throughout the Asia-Pacific region. Having previously worked in Europe, since moving to Singapore he worked with several leading institutions including Bloomberg, Saxo Capital Markets and Informa Global Markets, proving FX strategies based on a combination of technical and fundamental analysis as well as market flow information. Andrew began his career as an FX dealer with NatWest and the Royal Bank of Scotland in the UK.