Global Markets:
- Asian stock markets: Nikkei down 1.15 %, Shanghai Composite gained 0.20 %, Hang Seng fell 0.10 %, ASX declined 1.30 %
- Commodities: Gold at $1074 (-0.20 %), Silver at $14.18 (-0.10 %), WTI Oil at $37.39 (+0.65 %), Brent Oil at $40.45 (+0.40 %)
- Rates: US 10 year yield at 2.22, UK 10 year yield at 1.86, German 10 year yield at 0.59
News & Data:
- Reserve Bank of New Zealand cuts OCR by 25bps to 2.5 %, as expected
- RBNZ: Growth in economy has softened over 2015, due mainly to lower terms of trade
- RBNZ: NZD has risen since August; rise in exchange rate unhelpful and further depreciation would be appropriate to support sustainable growth
- RBNZ: CPI expected to move inside target range in 2016
- RBNZ: Monetary policy needs to be accommodative
- Australia Employment Change (Nov): 71.4K (exp -10.0K prev rev 58.3K)
- Australia Unemployment Rate (Nov): 5.8% (exp 6.0% prev 5.9%)
- Australia Participation Rate (Nov): 65.3% (exp 65.0% prev 65.0%)
- Australia Consumer Inflation Expectations (Dec): 4.0% (prev 3.5%)
- Bank of Korea Holds Its Key Interest Rate Steady At 1.50% As Expected
- PBoC Fixes Yuan Reference Rate At 6.4236 (prev 6.4140)
Markets Update:
The Aussie Dollar rallied overnight, after better than expected employment data. AUD/USD jumped from 0.7240 to 0.7330 immediately after the release, but failed to sustain momentum above 0.73 and eventually fell to a low of 0.7280. AUD/NZD rose has been under pressure in the early Asian session and fell from 1.0870 to 1.0710 after the RBNZ statement. However, it reversed some of the losses after the Australian data was released and recovered to 1.0840.
The RBNZ cut the main rate by 25 bps to 2.50 %, as expected, but the monetary policy statement was less dovish than expected. The central bank expects that one rate cut will be enough to push inflation to their target range, while the market was expecting hints for further easing in 2016. NZD/USD cleared the stops below 0.66 immediately after the rate cut, but then jumped to 0.6755. In the Asian session, it consolidated in 0.6720-80 range.
USD/JPY has been under pressure amid liquidation of long positions from leveraged funds and the break below 122.20 and eventually 121.80 triggered a decent amount of stops. The pair extended losses to as low as 121.10 in yesterday's US session. In Asia, it was able to recover slightly and rose to 121.70.
Upcoming Events:
- 07:45 GMT – French CPI
- 08:30 GMT – SNB Rate Decision
- 09:30 GMT – UK Trade Balance
- 12:00 GMT – Bank of England Rate Decision
- 13:30 GMT – US Initial Jobless Claims
- 13:30 GMT – Canadian Housing Price Index
- 18:00 GMT – Bundesbank President Weidmann speaks
- 18:30 GMT – Bank of England Governor Carney speaks
- 19:00 GMT – US Federal Budget Balance
- 21:30 GMT – New Zealand Business NZ PMI
