The reserve bank of New Zealand announced late yesterday evening the much anticipated rate cut, cutting it by 25 basis points. Many had anticipated a larger cut of 50 basis points and the NZ dollar jumped to a year high following the announcement, rising to levels last seen in May 2015. The aim of the cut was to significantly depreciate the Kiwi dollar and many traders viewed the move as conservative to say the least.
The announcement was followed by RBNZ Governor Wheelers Comments who highlighted the ‘NZD would certainly be stronger without the rate cuts’ insinuating that a further cut could be likely in order to stem the strength of the NZD. Whilst also highlighting global economic uncertainty as a motivation.
NZD/USD is currently trading around 0.72 having exceeded last year’s previous high of 0.7307
Elsewhere we had release of the UK’s RIC House price balance which fell to a sharp decline from last month’s reading of 15, registering just 5. Traditionally the property sector is a great area of UK interest and provided the theory that regardless of the weakness of the pound that BREXIT may be limiting or at least pausing both local and international investment into property, notably the London market.
GBP/USD opened today at around 1.2945 a closed just 10 points higher. GBP/EUR remained extremely volatile opening at 1.1638 before hitting a low of 1.159 before recovering and closing around 1.167 in the UK session.
This volatility in part was caused by the Italian Trade Balance release which is used to demonstrate the differential between the value of imported and exported goods. Italy realised a figure €5.03Bn demonstrating more had been exported than imported.
After mid-day a handful of data was released from the US, this included; Unemployment claims, Import prices and Mortgage delinquencies.
The unemployment figures reached were $10k better than expected coming in at 266k a slight improvement on last month. Import prices came in at 0.1% exceeding the anticipated figure of -0.2% whilst mortgage delinquencies dropped from last month’s figure of 4.77% to 4.66% all bringing further pressure on the FED to review interest rates.
USD/EUR being extremely volatile over the course of the UK sessions trading between a low of 0.89367 and a high of 0.8971.
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