|

RBNZ Cuts, RBA Looks on

As the RBNZ delivered its widely anticipated 25-bp rate cut to 2.00%, NZD made the “expected” jump, before settling lower following dovish comments from RBNZ governor Wheeler. Asserting its concern with sustainable decline in inflation and greater than expected moderation in wage growth, the RBNZ has explicitly opened the door for further easing in the coming months. As those statement failed to lower the value of the currency, Wheeler decided clear the air by stating “we want to see the currency fall” as the cat-&-mouse with the RBA continues with neither central bank want to see its currency rise appreciably.

RBNZ Cuts, RBA Looks on - Rbnz Rba Rates Fx Aug 10 (Chart 1)

Both central banks have frustratingly seen their currency rise appreciably due to: i) stabilisation in commodities and China market metrics; and 2) Fed keeping rates unchanged. A rate cut of at least 25-bps this year from of the two each central bank is a foregone conclusion in the event of no Fed hike this year, while the macro dynamics as well as market sentiment in China will be instrumental in gauging the moves from the RBA. Another reason the RBNZ has little choice but to cut some more is the planned macro-prudential measures set for September by the RBNZ, aimed at slowing speculative interest in the hot housing market. Such move would remove a crucial obstacle to interest rate cuts and will keep the RBA-RBNZ battle for the lowers well alive.

Ahead of this evening's RBNZ move, we issued a tactical NZD trade in addition to the AUDNZD existing long.

Author

Ashraf Laidi

Ashraf Laidi

AshrafLaidi.com

Ashraf Laidi is an independent global markets strategist with over 15 years' experience. He is author of "Currency Trading & Intermarket Analysis", and founder of AshrafLaidi.com.

More from Ashraf Laidi
Share:

Editor's Picks

EUR/USD hovers around nine-day EMA above 1.1800

EUR/USD remains in the positive territory after registering modest gains in the previous session, trading around 1.1820 during the Asian hours on Monday. The 14-day Relative Strength Index momentum indicator at 54 is edging higher, signaling improving momentum. RSI near mid-50s keeps momentum balanced. A sustained push above 60 would firm bullish control.

GBP/USD holds medium-term bullish bias above 1.3600

The GBP/USD pair trades on a softer note around 1.3605 during the early European session on Monday. Growing expectation of the Bank of England’s interest-rate cut weighs on the Pound Sterling against the Greenback. 

Gold sticks to gains above $5,000 as China's buying and Fed rate-cut bets drive demand

Gold surges past the $5,000 psychological mark during the Asian session on Monday in reaction to the weekend data, showing that the People's Bank of China extended its buying spree for a 15th month in January. Moreover, dovish US Federal Reserve expectations and concerns about the central bank's independence drag the US Dollar lower for the second straight day, providing an additional boost to the non-yielding yellow metal. 

Bitcoin, Ethereum and Ripple consolidate after massive sell-off

Bitcoin, Ethereum, and Ripple prices consolidated on Monday after correcting by nearly 9%, 8%, and 10% in the previous week, respectively. BTC is hovering around $70,000, while ETH and XRP are facing rejection at key levels.

Weekly column: Saturn-Neptune and the end of the Dollar’s 15-year bull cycle

Tariffs are not only inflationary for a nation but also risk undermining the trust and credibility that go hand in hand with the responsibility of being the leading nation in the free world and controlling the world’s reserve currency.

Bitcoin, Ethereum and Ripple consolidate after massive sell-off

Bitcoin, Ethereum, and Ripple prices consolidated on Monday after correcting by nearly 9%, 8%, and 10% in the previous week, respectively. BTC is hovering around $70,000, while ETH and XRP are facing rejection at key levels. Traders should be cautious: despite recent stabilization, upside recovery for these top three cryptocurrencies is capped as the broader trend remains bearish.