We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bearish
USD/JPY
Bullish
Gold
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Bitcoin
Bearish
More View more
Real Time News
  • Commodities Update: As of 15:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 1.30% Gold: 0.41% Silver: -0.26% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/IoO0jBxTTb
  • 🇪🇺 EUR Euro-Zone Consumer Confidence (FEB A), Actual: -6.6 Expected: -8.2 Previous: -8.1 https://www.dailyfx.com/economic-calendar#2020-02-20
  • 🇺🇸 USD Leading Index (JAN), Actual: 0.8% Expected: 0.4% Previous: -0.3% https://www.dailyfx.com/economic-calendar#2020-02-20
  • Tune in to @PeterHanksFX 's #webinar at 11:00 AM ET/4:00 PM GMT to learn how to identify trends with trader #sentiment. Register here: https://t.co/MqVMi2INbJ https://t.co/7IhnpmwkVs
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.09%, while traders in France 40 are at opposite extremes with 80.19%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/75lO0HM9cG
  • Commodities Update: As of 14:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 1.22% Gold: 0.32% Silver: -0.44% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/rO9w52PEOW
  • Heads Up:🇪🇺 EUR Euro-Zone Consumer Confidence (FEB A) due at 15:00 GMT (15min), Actual: N/A Expected: -8.2 Previous: -8.1 https://www.dailyfx.com/economic-calendar#2020-02-20
  • Heads Up:🇺🇸 USD Leading Index (JAN) due at 15:00 GMT (15min), Actual: N/A Expected: 0.4% Previous: -0.3% https://www.dailyfx.com/economic-calendar#2020-02-20
  • $EURUSD currently trades either side of 1.0800 and has lost nearly 450 pips since the December 31 high at 1.1240. Get your EUR/USD technical analysis from @nickcawley1 here: https://t.co/3qAfwuW37o https://t.co/3vG9IjVJts
  • Indices Update: As of 14:00, these are your best and worst performers based on the London trading schedule: France 40: -0.14% US 500: -0.18% Wall Street: -0.18% Germany 30: -0.26% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/9ehhDskOIg
RBNZ Holds Rates, Bollard Doesn't Offset Hawkish Lean

RBNZ Holds Rates, Bollard Doesn't Offset Hawkish Lean

2011-09-14 21:56:00
John Kicklighter, Chief Currency Strategist
Share:

THE TAKEAWAY: [RBNZ Holds Rates] > [Expectations for a Future 50bp Hike are Still Intact but Pushed Back a Little Further] > [NZD falls briefly]

Speculators weren’t expecting any dramatic moves from the RBNZ’s monetary policy decision; but a hold at 2.50 percent nevertheless reminds the market that the outperforming New Zealand currency is still running on expectations. Looking at interesting rate expectations (below), we see that the market has been pricing in approximately 50 bps worth of hikes from the New Zealand central bank for the past month. This is a reflection of Governor Bollard’s suggestion at a previous meeting that he would eventually replace the 50 basis point cut that was made in the wake of the Christchurch earthquake.

RBNZ_Holds_Rates_Bollard_Doesnt_Offset_Hawkish_Lean_body_Picture_5.png, RBNZ Holds Rates, Bollard Doesn't Offset Hawkish Lean

Graph Generated with Data from Bloomberg Professional Terminal

This interest rate outlook has been a particular boon for the New Zealand dollar as all its major counterparts are seen either holding rates at historically low levels or otherwise turning towards rate cuts in the near future. Below, we can see the influence that interest rate expectations can have on price action. Plotting the NZDUSD and AUDNZD exchange rates against the differentials in 12-month yield forecasts (RBA-Fed and RBA-RBNZ) has shown remarkable consistency for guiding price action. This is particularly true of AUDNZD where the Australian currency enjoys a higher benchmark yield; but expectations clearly favor the New Zealand dollar as its counterpart is facing cuts.

RBNZ_Holds_Rates_Bollard_Doesnt_Offset_Hawkish_Lean_body_Picture_6.png, RBNZ Holds Rates, Bollard Doesn't Offset Hawkish Lean

Graph Generated with Data from Bloomberg Professional Terminal

RBNZ_Holds_Rates_Bollard_Doesnt_Offset_Hawkish_Lean_body_Picture_7.png, RBNZ Holds Rates, Bollard Doesn't Offset Hawkish Lean

Graph Generated with Data from Bloomberg Professional Terminal

Guiding expectations for the future, Governor Bollard offered a few notable projections for monetary policy, the health of the economy and the country’s financial state. In reference to the benchmark rate, Bollard noted that it was prudent to hold the rate at 2.50 percent given the risks associated with the global economy and markets. That said, he warned that the cash rate will eventually need to be raised and that it could happen more quickly if the impact of global troubles are more mild then are anticipated.

To further develop speculation of future rate changes and their timing; the RBNZ lowered its GDP forecasts through March 2012 and 2013 to 2.9 percent and 4.3 percent respectively. Expectations for inflation were curbed somewhat by the high level of the currency. Setting the benchmark for rates, the central bank would also release expectations for the three-month bill rate to be at 2.9 percent in the fourth quarter of 2011 and 4.3 percent through the same period next year.

All told this keeps the slow and quiet burn for expectations of a replacement 50 bps hike sometime in the near future and a hold beyond that move. Perhaps something to take more seriously though is Bollard’s remarks on the SNB’s efforts to put a ceiling on the appreciation of the franc. The central banker said the policy was a “bold experiment” and he would be watching it with some “interest”. While it would be an expensive venture to try and cap the kiwi’s appreciation; the country is small enough that it wouldn’t necessarily catch a lot of backlash from its trade partners.

RBNZ_Holds_Rates_Bollard_Doesnt_Offset_Hawkish_Lean_body_Picture_8.png, RBNZ Holds Rates, Bollard Doesn't Offset Hawkish Lean

Charts Generated Using FXCM Strategy Trader

Written by: John Kicklighter, Senior Currency Strategist for DailyFX.com

To receive John's reports via email or to submit Questions or Comments about an article; email John at jkicklighter@dailyfx.com.

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

DISCLOSURES

News & Analysis at your fingertips.