The NZ Dollar surged higher yesterday after the NZ Reserve Bank left interest rates unchanged and maintained a neutral stance to their outlook.
The market had been looking for them to lower their growth outlook in line with recent downward revisions by most Central Banks around the world, including the RBA, Bank of England, ECB and the US Federal Reserve.
The RBNZ did acknowledge the main threat to their outlook was growth offshore but remained upbeat about the NZ economy and expect it to pick up steam this year after hitting a soft patch in the second half of 2018. Perhaps the biggest surprise were the Governors comments re Auckland house prices which they expect to keep falling. Despite this they see ongoing strength in residential construction. Time alone will tell if they are correct but for now the RBNZ are out of step with their international peers and this is what caused the NZD to push higher yesterday.
The Australian Dollar starts the day just under the 0.7100 level vs the USD as markets were cautiously optimistic that the USA’s tariff deadline of March 1 will be pushed back buying both sides more time to negotiate a trade deal.
UK and Euro
The UK Pound was weaker after a bigger fall in inflation was reported and the Euro was also softer after worse than expected industrial production data.
Today we get NZ House sales data at 9.00am and then Chinese trade data this afternoon.
Global equity markets are up slightly, Dow +0.34%, S&P 500 +0.30%, FTSE +0.82%, DAX +0.37%, CAC +0.35%, Nikkei +1.34%, Shanghai +1.84%. Gold prices are up to 1,315 an ounce. WTI Crude Oil priceshave held their gains, trading at $54.02 a barrel.
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