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Kiwi Firmer Ahead of FOMC Rate Decision

Published September 18, 2019

The Kiwi Dollar opens a touch higher today, ahead of tomorrow morning’s key US Fed rate decision. Market sentiment has improved overnight on news that Saudi oil production will be fully restored by the end of the month. Oil prices are down by over 5% after Mondays spike higher, however risk appetite remains in check while U.S – Iran tensions still exist, and the market awaits the U.S response to the attacks.

All Eyes on Fed

Trading is expected to be relatively light ahead of tomorrow mornings US Fed rate decision. While a cut of 25 basis points is priced in by markets, which will take the range down to 1.75 – 2.0%, the interest will be in Fed Chairman Jerome Powell’s press conference immediately after the announcement and what clues he gives around further easing. Meanwhile, U.S data released overnight saw industrial production beat market expectations.

Dovish RBA Surprises Market

The Aussie Dollar lost ground yesterday afternoon as minutes of last RBA meeting signalled that the central bank would consider more rate cuts in the near future. Tomorrow afternoon’s labour market data will be closely watched with yesterdays minutes indicating that the bank will assess global and domestic developments including the state of the country’s labour market before cutting rates further. So, tomorrow’s labour market report could tip the balance if it comes in much weaker than expected.

The Day Ahead

No major data releases in the calendar today, with tomorrow shaping up to be a big day. Main focus will be on tomorrow morning’s Fed decision, followed by NZ GDP a few hours later, and Australian employment numbers tomorrow afternoon.