The AUDUSD opened at 0.6988 (mid-rate), and the NZDUSD opened at 0.6575 (mid-rate) this morning.
In contrast to the RBA’s decision to adopt a wait and see policy before opting to cut interest rates and get ahead of a potential further fall in inflation and employment, yesterday the RBNZ made the decision to cut their OCR by 25bps, to a new record low of 1.50% and front run any deterioration in the data.
Following the decision by the RBNZ monetary policy committee to cut the OCR by 25bps and signalling a further interest rate cut is likely over coming months, the NZD tumbled to fresh multi-month lows trading down to 0.6530 against the USD before just as quickly reversing and trimming its losses by 50%.
“The Monetary Policy Committee decided a lower OCR is necessary to support the outlook for employment and inflation consistent with its policy remit.” Although employment is near its maximum sustainable level, the outlook for employment growth is more subdued and capacity pressure is expected to ease slightly in 2019. Consequently, inflationary pressure is expected to rise only slowly, according to the accompanying statement. The Reserve bank also cited external headwinds, including lower global growth as external factors prompting the cut.
A lack of progress in talks between the Government and Labour to break the Brexit deadlock has increased the pressure on UK Prime Minister Theresa May to step down and seen the British pound once again lost ground against the majors. Time is quickly running out for the UK to agree on a new Brexit plan and present it to the EU before European elections on the 23rd May.
CN & US Trade Deal Update
Trade talk headlines are likely to dominate markets for the rest of the week with Chinese negotiators currently heading to Washington to resume talks and stave off trump’s threat of higher tariffs on $200 billion worth of Chinese goods.
Global equity markets are mixed, - Dow +0.32%, S&P 500 +0.20%, FTSE +0.15%, DAX +0.72%, CAC +0.40%, Nikkei -1.46%, Shanghai -1.12%.
Gold prices have edged lower, down 0.3% trading at $1,280 an ounce. WTI Crude Oil prices are retracing yesterday’s fall, up 1.0% Trading at $62.10 a barrel.
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