The Kiwi Dollar begins the day around the same levels as yesterday ahead of the much anticipated RBNZ statement this afternoon. The NZD steadied after recent falls, as market risk sentiment got a boost on the back of encouraging US-China trade negotiation developments, and news that another US government shutdown is likely to be avoided.
All Eyes on RBNZ
Local market attention will be squarely focused on this afternoons RBNZ Monetary Policy Statement at 2pm. No change to rates is expected, although Governor Orr is widely expected to deliver a dovish statement in line with other central banks such as the Fed, BoE, and RBA. The key for the NZ Dollar will be “how dovish” the statement actually is. Market opinion is still varied with some expecting rates to be cut later in the year, while many others are expecting no change.
Greenback falls as riskier assets back in favour
The US Dollar was generally weaker as market risk sentiment was boosted as US political concerns eased, and US-China trade negotiations took a turn for the better. President Trump has stated his intent to meet President Xi Jinping in an attempt to bring a resolution to the ongoing trade war. Trump also announced overnight that he would consider extending the March 1st deadline to close a trade deal. Also adding to the positive market tone was news that Republican and Democrat negotiators had reached an agreement in principle to avoid another government shutdown. The deal needs to be signed off by the house, senate, and President Trump by Friday.
AUD Rallies as Business Confidence Bounces Back
The Australian Dollars was one of the best performing currencies overnight benefiting from increased optimism around a potential US-China trade war ceasefire. The Aussie had earlier made ground on a better than expected business confidence report released by the NAB. The NZD/AUD cross rate has lost ground , falling by about 0.5%, as the NZD failed to rally ahead of the RBNZ statement this afternoon.
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