RBNZ: OCR to remain at 1.75% tomorrow - TDS

Sandeep Kanihama FXStreet Contributor

Analysts at TD Securities points out that the RBNZ decides on the Official Cash Rate (OCR) tomorrow and TD and unanimous consensus expect the OCR to remain at 1.75%.

Key Quotes

“Since the 9 August Monetary Policy Statement, activity has been upbeat - especially Q2 GDP growing at twice the rate the Bank expected - but we expect Governor Orr to emphasise that inflation remains persistently low, and weak business sentiment is the main downside risk to the outlook.”

“TD and unanimous consensus expect the OCR to remain at 1.75% tomorrow. We expect the tone to reflect that the Governor will "wait, watch and worry", where the next move in the cash rate could be “up or down” as per the August policy assessment. We also expect a repeat where “we expect to keep the OCR at this level ... into 2020”. Dropping this latter statement would be undeniably hawkish, and is highly unlikely.”

“Some reduction in the global risk premium is expected to benefit currencies such as the NZD. And as the kiwi is at our high-frequency fair value, we favour a squeeze in positioning and continue to look for a push towards $US0.68 in the immediate future. Governor Orr will ensure that this will not occur in a straight line.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

GBP/USD clings to moderate gains near 1.3400

GBP/USD enters a consolidation phase near 1.3400 after closing in positive territory on Tuesday. Weaker-than-expected June CPI readings from the US make it difficult for the US Dollar to gather strength and allow the pair to stay afloat. Fed Chair Warsh's second day of congressional testminoy and US producer inflation data could ramp up the market volatility in the American session.

EUR/USD holds steady above 1.1400 ahead of US data

EUR/USD stabilizes following Tuesday's rebound and trades in a narrow channel above 1.1400. The US Dollar (USD) struggles to stay resilient against its rivals following the soft inflation data but escalating tensions in the Middle East limit the pair's upside for now. Later in the day, June producer inflation data from the US will be watched closely by market participants.

Gold struggles to build on Tuesday's gains, retreats toward $4,000

After rising more than 1% on Tuesday, Gold loses its traction midweek and declines toward $4,000. While the USD stays on the back foot following the soft June inflation data, escalating tensions in the Middle East causes XAU/USD to stretch lower. Markets await PPI data from the US, while keeping a close eye on headlines surrounding the US-Iran conflict.

Bitcoin, Ethereum, and Ripple show tentative recovery as key technical levels hold

Bitcoin, Ethereum and Ripple trade with a mild positive bias on Wednesday as sentiment improves across the cryptocurrency market. BTC is testing its 50-day Exponential Moving Average, ETH has broken above a key resistance level at $1,800, while XRP has found support around a key level.

BoC set to keep interest rates steady for sixth consecutive meeting

The Bank of Canada is widely expected to keep its policy rate unchanged at 2.25% on Wednesday. The central bank will announce its policy decision at 13:45 GM. This would be the sixth consecutive event with the central bank keeping its hand steady. The BoC left its policy rate unchanged at 2.25% last month, as widely anticipated.

-0.4%: Why the biggest CPI drop since 2020 couldn't buy back a single cut

The June CPI fell 0.4% on the month, the largest one-month decline since April 2020, dragging the annual rate to 3.5% from May's 4.2% and snapping a three-month acceleration streak. Core prices went nowhere, flat on the month and down to 2.6% YoY, both under consensus.