The Kiwi Dollar fell by over 1% yesterday as labour market data surprised markets on the downside. Q4 unemployment came in at 4.3% vs market expectations of 4.1%, and significantly away from the Q3 number of 3.9%. The worse than expected number saw the NZD immediately sold and has created uncertainty around next weeks Monetary Policy Statement from the RBNZ. While no change to rates is expected, yesterday’s data might influence the RBNZ’s messaging, especially after the RBA’s more dovish outlook earlier in the week, acknowledging a weaker global growth outlook.
Euro Zone Growth Forecasts Downgraded
A risk off tone appears to have returned to global markets with stock prices falling amid a flurry of growth downgrades from Central Banks across the globe. Overnight the EC cut its GDP growth forecasts for the Euro Zone economy . Growth this year is now expected around 1.3%, down from 1.9% previously.
The downgrade in Europe, follows similar announcements from the Fed, BoE, and RBA.
BoE Holds Rates
The Bank of England kept interest rates unchanged at 0.75% overnight as it awaits clarity on Brexit. Economic forecasts for UK growth were also downgraded to 1.2 percent in 2019, the weakest level in a decade. Meanwhile Prime Minister Theresa May is preparing to delay the second parliament vote on her Brexit deal until the end of February. The vote on a new deal is now being planned for the week beginning Feb. 25, just over a month before Britain is due to leave the EU on March 29.
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