The Kiwi Dollar opens higher this morning as commodity currencies all made ground against the US Dollar. The Kiwi had been well supported at yesterdays close after the RBNZ left the official cash rate at 1.50% as expected.
RBNZ Holds Rates
The RBNZ kept the OCR at 1.50% yesterday in line with market expectations, but indicated that more cuts may be in the pipeline. “Given the weaker global economic outlook and the risk of ongoing subdued domestic growth, a lower OCR may be needed over time to continue to meet our objectives,” the bank said in its statement. Meeting minutes also released backed up this sentiment with committee members agreeing “that more support from monetary policy was likely to be necessary”. Market reaction to the decision was limited with the NZD trading slightly higher after the announcement. Market expectations of a rate cut in August have grown with many economists picking a cut if the global economic outlook worsens and if the local economy remains subdued.
USD Softer Ahead of G20
Market attention is turning towards the G20 summit and the much anticipated meeting between Presidents Trump and Xi at the end of the week. Trump once again cast doubt over a trade solution being met, saying that his “plan B” was to impose more tariffs on Chinese imports if he doesn’t like what he hears from Xi. On the positive side, US Treasury Secretary Mnuchin said “we were about 90% of the way” on a China trade deal.
The Day Ahead
Tonight sees the release of US GDP data for Q1, with markets looking for further clues on the health of the US economy. On the local front today we have the latest ANZ business confidence survey results released this afternoon.
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