RBNZ surprise markets, another quiet day for economic data…
Overnight the Reserve Bank of New Zealand shocked markets by cutting rates more than forecast, sending the Kiwi dollar tumbling.
The central bank lowered interest rates by 0.5% instead of the consensus formed for a 0.25% cut. This lowers the New Zealand cash rate to an all-time low, in-line with of their Australian neighbours, at 1%. Currency traders and dealers immediately sold the Kiwi dollar on the surprise news, pushing it all the way down nearly 1.5 cents. As European participants begin to filter into their offices the NZD finds itself hovering just above 64 cents, down 1.8%.
It’s widely expected the Reserve Bank of Australia will cut rates later in the year too, a familiar scene to what we’re observing across the globe. Central banks are beginning to turn the liquidity taps on again to spur growth. Could the Bank of England join the party?! Possibly.
Today is another light day for economic numbers. For the pound – focus will remain around Brexit and any related soundbites. Yesterday’s coming from Michael Gove (in-charge of no-deal preparations) stating that the UK are willing and ready to negotiate but the EU are not engaging them. Same old stalemate rhetoric. In addition, many will be positioning for UK GDP which will be a huge release on Friday morning.
Written by Viv Savani. 8:41am, August 7th 2019
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