Kiwi Declined On Disappointing RBNZ, Pound Remains Fragile

Market Reviews

Kiwi has broadly fallen on disappointing rate statement from the Reserve Bank of New Zealand. Pound is also weak. Loonie significantly reinforced. Aussie was boosted by Asian stocks’ gains to trade as the strongest. Meanwhile, DOW reduced -0.18%. S&P 500 fell -0.03%. NASDAQ lifted 0.06% to 7888.33. 10 year yield dropped -0.002 to 2.971. Nikkei lowered -0.2% to 22598.39. China Shanghai SSE broke 2800 handle to close at 2796. Hong Kong HSI rose 1.17%. Singapore Strait Times reduced -0.4%.

RBNZ revised its interest rate expectations down. The Official Cash Rate should remain at low levels, “but for longer”, through 2019 and into 2020. The new Monetary Policy Statement concluded that RBNZ will execute a full 25bps hike to 2.00% in December quarter of 2020. GDP growth forecasts were lowered from 2.8% to 2.7% in 2018, from 3.1% to 2.6% in 2019, from 3.3% to 3.4% in 2020 and from 3.1% to 3.2% in 2021. CPI projections remained at 1.1% in 2018, 1.6% in 2019, 1.8% in 2020, and 2.0% in 2021.

Yesterday, China’s State Council renamed the “National Science, Technology and Education Leading Group” to “National Science and Technology Leading Group”, expressing its commitment to science and technology. Chinese Consumer Price Index rose from 1.9% to 2.1% yoy in July. Producer Price Index cooled from 4.7% to 4.6% yoy. Japanese M2 was up 3.0% yoy in July. Machine orders declined -8.8% mom in June. Machine tool orders were up 13.0% yoy in July.

As of today’s data, the European Central Bank is going to publish economic bulletin today, Canada will announce housing starts and new housing price index and US will feature Producer Price Index, wholesale inventories and unemployment claims.