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New Zealand Dollar Slumps as Interest Rate Expectations Deteriorate

New Zealand Dollar Slumps as Interest Rate Expectations Deteriorate

Ilya Spivak,

Talking Points:

  • NZ Dollar Slumps as Markets Bet on Most Dovish RBNZ Outlook Since 2009
  • Aussie Dollar Fails to Hold Gains After Comments from RBA DepGov Lowe
  • US Dollar Corrects Higher After Dropping the Most in a Month Last Week

The New Zealand Dollar underperformed in overnight trade amid deteriorating RBNZ policy expectations. Priced-in bets reveal investors are leaning toward two 25 basis point rate cuts over the coming 12 months, making for the most dovish outlook since 2009.

The Australian Dollar saw a bit of a boost following remarks from RBA Deputy Governor Lowe, who hinted the central bank probably won’t cut the cash rate further in the near term.Gains proved short-lived however considering the message echoed the tone of the RBA’s latest policy statement, which have had ample time to be priced already.

The US Dollar launched a broad-based recovery, scoring gains against nearly all of the majors in a move that appeared corrective after the benchmark unit lost 1.04 percent last week, the most in a month. From here, the greenback will look to minutes from April’s FOMC meeting and April’s US CPI data (both due later this week) for direction cues.


Asia Session

22:30NZDPerformance Services Index (APR)56.5-57.6
23:30AUDRBA’s Lowe Gives Speech in Sydney---
23:50JPYMachine Orders (YoY) (MAR)2.6%-6.0%5.9%
23:50JPYMachine Orders (MoM) (MAR)2.9%1.5%-1.4%
1:30CNYApril Property Prices---
1:30AUDNew Motor Vehicle Sales (MoM) (APR)-1.5%-0.7%
1:30AUDNew Motor Vehicle Sales (YoY) (APR)2.8%-4.6%
4:00JPYTokyo Condominium Sales (YoY) (APR)-7.6%--4.0%
4:30JPYTertiary Industry Index (MoM) (MAR)-1.0%-0.5%0.4%
4:30JPYBOJ Maeda Speaks at Panel Discussion---
4:30JPYCapacity Utilization (MoM) (MAR)-1.2%--3.2%
4:30JPYIndustrial Production (MoM) (MAR)-0.8%--0.3%
4:30JPYIndustrial Production (MoM) (MAR)-1.7%--1.2%

European Session

7:00CHFSNB Sight Deposits--Low
7:15CHFRetail Sales (YoY) (MAR)--2.7%Medium
13:45EURECB Publishes Asset-Purchase Data--High

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3

--- Written by Ilya Spivak, Currency Strategist for

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.