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    Wendsday News November 23

    Official Cash Rate NZD: Market participants are currently split on whether rates will be raised by 50 or 75 basis points. Investors think the RBNZ might play it cautious because it hasn’t raised rates by 75 bps so far and other central banks have slowed down their tightening pace lately. A string of powerful data releases suggested the economy is running much hotter than policymakers anticipated. For starters, inflation far exceeded the central bank’s forecasts during the third quarter, while the jobs market went gangbusters, with the unemployment rate holding near record lows even as labor force participation hit new all-time highs. Still, the balance of evidence points to a 75 bps move as the most prudent option, an outcome that could temporarily boost the kiwi.

    RBNZ Monetary Policy Statement NZD: In this report the RBNZ is mandated to include details on how they will achieve their inflation targets, how they propose to formulate and implement monetary policy during the next five years, and how monetary policy has been implemented since the last statement’s release. It provides valuable insight into the bank’s view of economic conditions and inflation – the key factors that will shape the future of monetary policy and influence their interest rate decisions;

    RBNZ Rate Statement NZD: It’s among the primary tools the RBNZ uses to communicate with investors about monetary policy. It contains the outcome of their decision on interest rates and commentary about the economic conditions that influenced their decision. Most importantly, it discusses the economic outlook and offers clues on the outcome of future decisions.

    RBNZ Press Conference NZD: The Reserve Bank of New Zealand (RBNZ) holds monetary policy meetings seven times a year, announcing their decision on interest rates and the economic assessments that influenced their decision. The central bank offers clues on the economic outlook and future policy path, which are of high relevance for the NZD valuation. Positive economic developments and upbeat outlook could lead the RBNZ to tighten the policy by hiking interest rates, which tends to be NZD bullish. The policy announcements are usually followed by Governor Adrian Orr’s press conference.

    Flash Services/Manufacturing PMI EUR: The Services/Manufacturing Purchasing Managers Index (PMI) released by Markit Economics captures business conditions in the services/manufacturing sector. As the services /manufacturing sector dominates a large part of total GDP, the services /manufacturing PMI is an important indicator of business conditions and the overall economic condition in Euro. A result above 50 signals is bullish for the Euro, whereas a result below 50 is seen as bearish.

    Durable Goods Orders USD: The Durable Goods Orders, released by the US Census Bureau, measures the cost of orders received by manufacturers for durable goods, which means goods planned to last for three years or more, such as motor vehicles and appliances. As those durable products often involve large investments they are sensitive to the US economic situation. Generally speaking, a high reading is bullish for the USD.

    Unemployment Claims USD: Every Thursday, the US Department of Labor publishes the number of previous week’s initial claims for unemployment benefits in the US. Since this reading could be highly volatile, investors may pay closer attention to the four-week average. A downtrend is seen as a sign of an improving labour market and could have a positive impact on the USD’s performance against its rivals and vice versa. If this index increases compared to the previous rate, the November average of this index will be higher than October and will put downward pressure on the dollar.

    New Home Sales USD: The number of New Home Sales released by the US Census Bureau is an important measure of housing market conditions. House buyers spend money on furnishing and financing their homes so as a result the demand for goods, services and the employees is stimulated. Generally, a high reading is seen as bullish for the USD, whereas a low reading is seen as bearish.

    Revised UoM Consumer Sentiment USD: Consumer exuberance can translate into greater spending and faster economic growth, implying a stronger labor market and a potential pick-up in inflation, helping turn the Fed hawkish. This survey’s popularity among analysts is justified because the data here includes interviews conducted up to a day or two before the official release, making it a timely measure of consumer mood, but foremost because it gauges consumer attitudes on financial and income situations. Actual figures beating consensus tend to be USD bullish.

    FOMC Meeting Minutes USD: Signs that US inflation is finally simmering down dealt a heavy blow to the US dollar lately, as traders unwound bets that the Fed will raise rates beyond 5%. The dollar is trading as if the war against inflation is about to end, but Fed pricing and US yields suggest this was only a minor victory. Inflation is still running at nearly four times its target, the labor market is in good shape, and consumption hasn’t slowed yet. Later on Wednesday, the minutes of the latest FOMC meeting are out. The overall message will likely be one of ‘determination’, which could give the dollar a small boost. Overall, the dollar is at a crossroads. Most of the elements that fueled this stunning rally over the last two years seem to be losing their kick, with inflation cooling off and the Fed shifting into lower gear, yet it’s still too early to call for a proper trend reversal.

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