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NZD Lifted on RBNZ Comments

Published September 27, 2019

The New Zealand dollar opens higher this morning following the RBNZ Governor stating it was unlikely he would need to use unconventional monetary policy.

RBNZ Governor Says Unconventional Policy Unlikely

Reserve Bank of New Zealand governor Adrian Orr said in a speech yesterday afternoon that it was unlikely the central bank would need to use unconventional monetary policy tools, like those used by the Federal Reserve and the European Central bank. Although, it would be negligent not to be prepared in such a scenario. “Some view these low rates as signs of concern. They can also be an opportunity. We are confident that rates will remain low for a number of years, providing a great environment to invest,” said Orr. Comments from Orr were more upbeat than markets anticipated and saw the NZD rise 0.3%

Trade Talks

Chinese commerce ministry said they are “making preparations to ensure positive progress is made during the negotiations”, as China and the US are still discussing details ahead of the upcoming trade talks in October. Trump also stated the “US and China were having good conversations and that an agreement could happen sooner than you think”.

To add potential complications to the trade negotiations, the US has imposed penalties against a small group of Chinese tanker firms for continuing to carry Iranian crude after sanction waivers lapsed in May, with China being the world’s largest oil importer.

Elsewhere in trade sanctions news, the World Trade Organization will authorize the U.S. to impose nearly USD8 billion of tariffs on European goods due to illegal state aid provided to Airbus SE, a move that will likely trigger retaliatory measures from the EU.


US gross domestic product increased at an annual rate of 2.0% in the second quarter of 2019 and in line with forecasts. In the first quarter, real GDP increased only by 3.1%. Downward revisions to personal consumption expenditures and nonresidential fixed investment were primarily the major factors for the upward revisions of state and local government spending and exports.

Focus now turns to this morning’s ANZ NZ Consumer Confidence data which will be released at 10am.