The NZD remains under pressure ahead of the RBNZ rate announcement today and as trade jitters continue to rock markets.
RBA Holds Rates
The RBA left the official cash rate unchanged at 1.50% stating “The Board judged that it was appropriate to hold the stance of policy unchanged at this meeting. In doing so, it recognised that there was still spare capacity in the economy and that a further improvement in the labour market was likely to be needed for inflation to be consistent with the target. Given this assessment, the Board will be paying close attention to developments in the labour market at its upcoming meetings.” Further, they say “The outlook for the global economy remains reasonable, although the risks are tilted to the downside. So it would appear that the RBA is in data dependent mode when assessing if a cut is appropriate going forward.
The AUD rallied more than 0.5% against the USD and the NZD on the announcement.
RBNZ in focus today
The RBNZ meet today at 2pm for their rate decision and will be the first meeting held under their new committee structure, where 7 members will vote on the rate decision. Previously this was the sole decision of the RBNZ Governor. Markets are now pricing in a chance of a rate cut just below the 50/50 mark as a touch of optimism returns, with the possibility we may see the RBNZ follow the RBA’s lead and hold rates.
Dairy Milk Auctions resulted in a .4% rise overnight, with an average selling price of $3490 per tonne and resulting in an 11th consecutive increase in dairy prices, whilst volumes were down.
Trade Tensions Rise
Markets dumped risky assets and US stocks as trade tensions increased between the US and China as global growth fears rise. News that China is sending their top negotiator, Vice Premier Liu, helped eased concerns with trade negotiations resuming tomorrow for 2 days. The safe-haven Yen is the best performing currency rising 0.6% against the NZD as markets take a risk-off approach.
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