The Kiwi dollar edges higher ahead of the RBNZ rate announcement.
Euro Tumbles as Recession Risk Rise
The Euro fell overnight on the release of the Eurozone’s flash purchasing managers index (PMIs) suffering a fall in both the manufacturing and services sector. Manufacturing PMIs fell to 50.4 in September from 51.9 in August and below forecasts for a reading of 51.9. Resulting in its weakest reading since mid-2013. While, services fell to an 8-month low of 52 from 53.5 in August.
German manufacturing PMI fell to 41.4 in September from 43.5, contracting at the fastest pace in more than a decade, increasing fears of a recession.
Fed Bullard: US Policy Now “Considerably Looser”
A speech from Federal Reserve Bank of St Louis President James Bullard on the US economy and monetary policy earlier this morning, cited the Federal Reserve’s policy shift since last year has made monetary policy “considerably more accommodative than a year ago, but world markets are likely expecting more to come”. The Fed cut rates twice this year and top officials say they will now make decisions on a meeting by meeting basis”
Bullard said The Fed “may choose to provide additional accommodation going forward” as global trade and other risks threaten to cause the United States to slow more than expected this year and undercut the Fed’s ability to achieve its 2% inflation target.
RBNZ Rate Announcement Tomorrow
The Reserve Bank meet tomorrow at 2pm to announce their next rate move, with markets widely expecting the RBNZ to hold interest rates at 1% following their surprise 50 basis-point cut last month. Some are pricing in around a 25% chance of a cut, however most economists are expecting a 25 basis-point cut in November.
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