FX News

FX update: markets await RBNZ

Market Overview

• The Reserve Bank of New Zealand meets tomorrow and will most likely leave the cash rate unchanged at 5.5%. A small group of market analysts are suggesting the RBNZ could raise. We think it would be strange for the RBNZ to resume rate hikes in the face of downwardly revised growth revisions and inflation, of which should be back within target over the next 18 months.
• China is willing to work with New Zealand on a free trade agreement..
• The Federal Reserve predicts the greatest risk to rate cuts are geopolitical uncertainties, a cut prior to their 2% inflation target is achieved would be based on risks abroad.
• Over the past 2 years since the Russian war started against Ukraine western sanctions have failed to stop the war. The US has introduced a raft of new sanctions over the past week to punish Moscow.
• The S&P, Dow Jones and the Nasdaq will all close out February in the green marking 4 straight months of gains.
• The New Zealand Dollar (NZD) has been the strongest currency this month while the weakest currency in February has been the Japanese Yen (JPY)

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