The New Zealand dollar has crept higher over the past 24 hours but will face big challenges today with the RBNZ OCR Decision at 2:00 PM. Markets are leaning towards no change in the OCR (priced in with a 70% chance) which will leave the rates on hold at 1.50%. Instead markets will be looking for guidance from the RBNZ as to when they might cut rates again (with most expecting September). We’ll also be looking for guidance as to how many times the RBNZ is planning on cutting rates. Of course, if the RBNZ does surprise markets with another rate cut this afternoon, then you can expect the NZD to suffer.
US Dollar Oversold? Trump Blames Fed; Powell & Bullard Weigh In
The US dollar has been the biggest loser over the past two weeks, with most major currencies making gains of between 1-2% against the greenback. The weaker US dollar has been in response to US trade conflicts with China, US political conflict with Iran, an easing bias from the Federal Reserve and soft US data.
According to officials, President Trump believes the US dollar is too strong and blames the Fed’s policy. Chairman Powell, however, insists the Fed is insulated from political interference. The Fed’s Bullard has also stated he doesn’t see the need for a 50bp rate cut when they meet again on 31 July (implying instead that just a 25bp rate cut is appropriate), in what has been the strongest signal yet by a Fed official.
Later This Week
Still to come this week is key US data including Durable Goods, GDP, and Consumption numbers. All are key figures which will play their part in the Fed making their next decision on rates.
From further afield comes GDP data from Canada and the UK, and Inflation data from Europe. These are key economic indicators for their respective currencies.
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