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NZD Tumbles As Fed Cut Rates, But Split on Next Move

The USD surges higher this morning on news the Federal Reserve cut interest rates, however signals move to a holding. READ MORE

The USD surges higher this morning on news the Federal Reserve cut interest rates, however signals move to a holding pattern.

Fed Delivers Hawkish Rate Cut

The Federal Reserve cut interest rates by 25 basis points this morning to a range of 1.75-2.00% as widely expected by markets. The decision, however was not unanimous with seven committee members voting in favour and two voting to keep rate unchanged and one Fed President James Bullard calling for a bigger 50 basis point cut. Forecasts from all 17 policymakers released at the end of the meeting showed even broader disagreement, with seven expecting a third rate cut this year, five seeing the current rate cut as the last for 2019, and five who appeared to have been against even Wednesday’s move.

Fed Chair Jerome Powell described the US economic outlook as favourable and said the rate cut was designed to provide insurance against ongoing risks including weak global growth and resurgent trade tensions.

Trump blasts Fed Powell saying that the central bank had “No guts, no sense, no vision!”

Focus Now Shifts to NZ GDP

Markets will now be looking ahead to this morning’s NZ second-quarter gross domestic product data, released at 10.45am. The Reserve Bank are expecting 0.5% growth, falling 2% on an annualized basis and is also in line with markets forecasts.

This afternoon we get the Australian Employment data with expectations for 10k new jobs added. Tonight, we see the Bank of Japan rate announcement who could signal further stimulus, this will then be followed by the Bank of England’s rate announcement which are widely expected to hold.