RBNZ unexpectedly lowers rates
Reserve Bank of New Zealand surprised markets by surprise, lowering its key interest rate by 25 bps to 2.25%. The head of the RBNZ G. Wheeler explained this sudden decision to control the deteriorating forecasts for world economic growth and, in particular, uncertain prospects of economic development of China. As might be expected, the New Zealand dollar fell steadily throughout the night, traders act out lowering rates. NZD fell significantly in relation to all currencies: by 0.65% against the CAD, 2% – in relation to the AUD, 1.64% – in relation to the USD and 1.23% – in relation to EUR. After the announcement of NZD / USD fell from 0.6785 solutions to 0.6630. We believe that NZD will soon return to the level of 0.65, which corresponds to the lower boundary of the channel month currency pair.
Finally arrived on Thursday, and traders are preparing to cross the wild jumps in euros after a press conference M. Draghi, who is likely to meet the expectations of the markets, and it has announced another decrease in rates on deposits, which now stands at -0.30%. However, this case may not be limited. At the disposal of the ECB has a number of tools of regulation, including the increase or extension of the program of quantitative easing (QE), as well as the expansion of the list of redeemable securities. It is difficult to say which option is already priced in, but one thing is for sure – the market expects the ECB sequence, and M. Draghi’s better not to disappoint traders, as was the case on 3 December last year. EUR / USD failed to surpass the 200-day moving average and fell below the Asian session on schedule. Most likely, on the eve of the ECB meeting the pair will trade without any particular direction, because traders adjusted positions are occupied.
EUR / CHF is also now the center of attention – the markets will be closely watching the reaction of the SNB on the ECB decision. We expect that the Swiss central bank will take a waiting position (as opposed to January last year), and its further action will depend not on the decision Draghi, and the reaction to it markets. Now EUR / CHF was trading at between 1.09 and 1.10.
Trading on the stock market in Asia are homogeneous, shares of Japanese companies rose by more than 1%. Nikkei up 1.26%, Topix gained 1.49%. Indexes in Mainland China, Shnaghai Composite and the Shenzhen Composite continued to fall, because investors seriously doubt the ability of the Chinese government to successfully carry out the necessary reforms. New Zealand’s stock index rose 0.79%, the Australian ASX Index fell 0.14%. Futures on European stock indexes fell below, traders are in no hurry to replenish the portfolio before the meeting of the ECB.
Today, traders expect the publication of data on changes in the volume of industrial production and manufacturing production in France, the CPI in Denmark and Norway, to change the volume of retail trade data in Spain and Brazil, to change the output data in the processing industry in South Africa, the ECB announcement on the basic interest rate, the number of initial applications for unemployment benefits and the monthly report on the execution of the state budget in the US PMI index of activity in the manufacturing sector, The index cents for food in New Zealand.
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