Kiwi crashes on dovish shift by RBNZ


NZD/USD at two-week low

The Reserve Bank of New Zealand kept rates unchanged at today’s meeting, as expected but it was the accompanying statement that impacted the most. The Bank shifted to a more dovish stance, joining a host of other central banks that have adopted that bias since the Fed stopped hiking rates. The Bank said the next rate adjustment would likely be lower (at previous meetings they had stated that the next move could be up or down) and that it would keep the current expansionary stance for a “considerable period”.

It expects low interest rates, increased government spending and investment to support growth in 2019 while acknowledging that the world economy is weaker and the risk of a pronounced global downturn has increased.

Money markets are now giving a near 50% chance of a rate cut by May and a 75% chance of one by August. The kiwi was immediately marked lower and crashed to the lowest level versus the US dollar since March 11, crossing below the 100-day moving average at 0.6812 with ease. The next possible support level could be the 200-day moving average at 0.6738, which has supported prices on a closing basis since February 13.


NZD/USD Daily Chart

Source: OANDA fxTrade



China industrial profits slump

Further indication of a slowing China economy was seen in the industrial profits totals for January-February. Companies saw their profits fall 14% to 708 billion yuan (about $105.4 billion) as the economic slowdown and the ongoing trade war with the US took their toll. That was the worst result since 2011, according to data from the National Bureau of Statistics.

Despite the disappointing data, China shares held on to gains, taking their cue from Wall Street’s advance yesterday and rising for a second straight day.


China A50 Daily Chart

Source: OANDA fxTrade


ECB speakers out in force

Whilst the data calendar is relatively quiet today, the ECB is not. A plethora of speakers fill the day, ranging from Draghi at 0800GMT followed by Praet, Lautenschlager, De Guidos and ending with Mersch at 1330GMT. Maybe we will get hints as to what the ECB really thinks growth will be, with rumours circulating it could be even lower that the official downgraded forecast of 1.1%.

The rest of the calendar is populated with the US trade numbers for January, with the deficit expected to improve to $57.0 billion from $59.8 billion in December, while Canada’s deficit for the same month is seen contracting to CAD 3.5 billion on lower imports.

The UK Parliament holds yet another vote on Brexit with news overnight suggesting PM May’s proposed deal is garnering a bit more support. Whether it will be enough to pass the deal before Friday’s EU deadline is doubtful. Meanwhile the pound has been remarkably steady so far this week.


The full MarketPulse data calendar can be viewed at



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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.
Andrew Robinson

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