New Zealand Dollar Slumps on Swelling RBNZ Rate Cut Bets

2016-08-15 06:13:00

Ilya Spivak, Head Strategist, APAC

Talking Points:

New Zealand Dollar falls as soft PSI data boosts RBNZ rate cut bets
British Pound corrects higher after last week’s broad-based selloff
US Dollar, Yen vulnerable as S&P 500 futures hit at risk-on mood

The New Zealand Dollar underperformed in overnight trade. The currency fell alongside front-end borrowing costs, hinting that firming RBNZ rate cut expectations may have been behind the move. A sharp drop in the Bank of New Zealand’s Performance of Services index may have helped spark the selloff. The report showed the pace of activity growth in the non-manufacturing sector plunged to the weakest since November 2014. The British Pound mounted what appeared to be a corrective recovery having lost ground against all of its major counterparts last week.

Looking ahead, a quiet economic calendar is likely to make for a quiet, consolidative start to the trading week. S&P 500 futures are pointing cautiously higher, hinting at a risk-on mood that may translate into near-term weakness for the anti-risk US Dollar and Japanese Yen. Lasting follow-through seems unlikely however. A wealth of high-profile event risk is due to cross the wires in the days ahead and traders are unlikely to commit to a firm directional bias in the interim.

Asia Session

GMT	CCY	EVENT	ACT	EXP	PREV
22:30	NZD	Performance Services Index (JUL)	54.2	-	56.4
23:01	GBP	Rightmove House Prices (MoM) (AUG)	-1.2%	-	-0.9%
23:01	GBP	Rightmove House Prices (YoY) (AUG)	4.1%	-	4.5%
23:50	JPY	GDP SA (QoQ) (2Q P)	0.0%	0.2%	0.5%
23:50	JPY	GDP Annualized SA (QoQ) (2Q P)	0.2%	0.7%	2.0%
23:50	JPY	GDP Nominal SA (QoQ) (2Q P)	0.2%	0.2%	0.8%
23:50	JPY	GDP Deflator (YoY) (2Q P)	0.8%	0.7%	0.9%
23:50	JPY	GDP Private Consumption (QoQ) (2Q P)	0.2%	0.2%	0.7%
23:50	JPY	GDP Business Spending (QoQ) (2Q P)	-0.4%	0.2%	-0.7%
04:30	JPY	Industrial Production (MoM) (JUN F)	2.3%	-	1.9%
04:30	JPY	Industrial Production (YoY) (JUN F)	1.5%	-	-1.9%
04:30	JPY	Capacity Utilization (MoM) (JUN)	-1.5%	-	-2.4%

European Session

GMT	CCY	EVENT	EXP	PREV	IMPACT
07:15	CHF	Producer & Import Prices (MoM) (JUL)	-0.2%	0.1%	Low
07:15	CHF	Producer & Import Prices (YoY) (JUL)	-0.9%	-1.0%	Low
08:00	CHF	Total Sight Deposits (AUG 12)	-	511.4b	Low
08:00	CHF	Domestic Sight Deposits (AUG 12)	-	437.3b	Low