The NZD rose overnight as US yields hit their lowest rate in 2 years and ahead of tomorrow’s RBNZ rate announcement.
USD falls as US Yield Invert
Following the inversion of the US yield curve on Friday, former Fed Chair Yellen commented the yield curve may signal a need to cut rates, not a recession. Markets are now pricing in rate cut by the end of the year, a sharp contrast to the Fed’s recent outlook of no hikes in 2019 and one hike in 2020. The USD fell and global stocks dropped on growing concerns over global economic growth.
Chaos in Parliament as MPs Aim To Seize Control of Brexit
May has told MPs “It is with great regret that I have to had conclude that as things stand there is still not sufficient support in the House to bring back the deal for a third meaningful vote”.
Parliament prepare to try to seize control of the Brexit process and a vote will take place this morning in a move to take away power from May. It remains unclear how, when, or if Brexit will happen. Both the Pound and Euro have weakened as Brexit uncertainty weighs.
RBNZ in Focus Tomorrow
The RBNZ is expected to hold interest rates at the record low 1.75% when they meet tomorrow at 2pm. Markets will be watching closely for any shift in sentiment from RBNZ Governor Adrian Orr and accompanying notes on the future rate path. A more neutral tone could provide support for the NZD, however if Orr is more dovish than expected we could see the Kiwi fall below the 0.68 levels.
German Business Confidence Improves
Germany’s Ifo business sentiment opinion poll was published overnight, after weakness in the PMI version last week. The Ifo Institute’s March business climate index unpredictably rose, calming nerves after poor German manufacturing data and dissipates recession fears.
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