The Kiwi Dollar opens lower this morning ahead of this afternoon’s RBNZ OCR decision and Monetary Policy Statement. The NZD was sold yesterday afternoon after the latest RBNZ survey showed a downturn in inflation expectations. Elsewhere, markets have been relatively quiet with a lack of major data releases and the U.S returning from their long weekend.
All Eyes on RBNZ
The big event today is the RBNZ’s interest rate decision, due out at 2pm local time. Market opinion has moved from yesterday, with most analysts now expecting a 0.25% cut to the official cash rate. This is a change from 24 hours ago when opinion was very much split between a cut and no cut. The most notable change has been from Westpac Bank who have now moved in line with the other major NZ banks predicting a 0.25% cut this afternoon. The change in view was possibly sparked by weaker than expected market inflation expectations released yesterday. The RBNZ’s survey of expectation showed 2 year inflation expectations slipping from 1.86% to 1.80%. While OCR expectations are for a cut, there is also the chance the committee votes for no change, leaving future cuts in the back pocket if needed. Today’s decision will be the last formal rate setting until February next year.
Trump Keeps Markets Guessing
In a speech delivered earlier this morning, President Trump was no clearer on the trade situation with China, saying that he is hopeful a trade deal with China will soon be reached. He said Beijing was “dying to make a deal” and described a phase-one agreement as “close”. These comments are in contrast to a tweet over the weekend claiming that no tariff rollbacks had been agreed to. Market sentiment will no doubt continue to change as the trade situation develops.
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