The price action in NY was relatively mild up until the FOMC and RBNZ rate decisions/statements. The Fed's statement was little changed but the fact that they reinforced their willingness to support the markets via more purchases of MBS and other paper put a bid under the USD and stocks. This broke the recent negative correlation between the buck (which is viewed as a safe haven) and equities. The Fed also noted that they would look to purchase Treasuries if necessary but the fact that they did not say they were pursuing this outright saw bond prices little changed overall.
EUR/USD made its session high early just above 1.33 as rumors that China was on the offer into 1.3310 saw heavy selling into that area. The FOMC statement provided the other catalyst and EUR/USD ended the session -130 pips lower near the 1.3140/50 area. USD/JPY jumped about 100 pips towards 90.35/40 as yields for US paper popped.
The RBNZ came in later and cut rates by a much more aggressive -150 basis points to a new record low 3.5%. Kiwi dropped a quick -50 pips on the cut to 0.5250 but extremely dovish comments out of Bollard (who said a weaker Kiwi would help the New Zealand economy no less) saw another leg down into a 0.5185/80 low point. The pair was attempting to get back above 0.5250 resistance as the NY session was coming to a close.
Upcoming Economic Data Releases (Asia Session) prev est
- 1/28 23:50 GMT JN Large Retailers' Sales DEC -3.20% -5.20%
- 1/28 23:50 GMT JN Retail Trade YoY DEC -0.90% -1.60%
- 1/28 23:50 GMT JN Retail Trade MoM SA DEC -0.10% -0.80%
- 1/29 1:30 GMT JN BOJ Deputy Governor Nishimura to Speak in Utsunomiya City 29-Jan
- 1/29 2:00 GMT NZ Money Supply M3 YoY DEC 9.40% - -
