Article Highlights

  • New Zealand quarterly inflation expectations slipped from 2.1% to 1.8%
  • RBNZ rate cut speculations drag Kiwi down
  • Greek government officials to submit list of proposed reforms today
  • Swiss employment level, euro zone final CPI readings due
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My, my! Kiwi forex traders are being so sensitive to the drop in quarterly inflation expectations for New Zealand, as some started speculating that an RBNZ rate cut is due. The report showed that business managers expect the price of goods and services to fall from 2.1% to 1.8% in Q1, which might prompt monetary policy easing from the central bank.

The Kiwi had its wings clipped and plummeted throughout the session, with NZD/USD down 48 pips so far (-0.65%) and NZD/JPY lower by 39 pips (-0.44%). EUR/NZD popped up from its consolidation around 1.5050 and is up 112 pips (+0.75%) while GBP/NZD advanced by 130 pips to the 2.0670 area (+0.63%).

No other major reports were released in the past few hours, but it looks like the other comdolls took their cue from the Kiwi and the downturn in risk appetite. AUD/USD is lower by 32 pips (-0.41%) and USD/CAD is up 30 pips (+0.23%). Yen pairs are mixed, with EUR/JPY up by 32 pips (+0.24%) and testing the 135.00 handle while AUD/JPY is down 17 pips (-0.19%) to the 92.50 support level.

A few medium-tier economic releases are lined up for the London trading session, as Switzerland will print its employment level (9:15 am GMT) and the euro zone will release its final CPI readings for January (11:00 am GMT). U.K. Inflation Report hearings are also scheduled and might trigger increased volatility among pound pairs, especially if officials reiterate that the downturn in price levels might actually be good for spending and growth.

The Eurogroup meeting could steal the show though, as Greek government officials are set to submit their list of proposed economic reforms for the EU’s approval today. It seems that markets are expecting positive results, which would mean that the four-month bailout extension would push through and Greece might have enough time to clean up its act before fulfilling debt requirements. Also watch out for ECB Governor Draghi’s testimony at 3:00 pm GMT, as he could confirm if the central bank is willing to support Greece’s troubled finances.

U.S. Session Recap

Bonnie and Clyde, peanut butter and jelly, Justin Bieber and his hair. Some things just go well together.

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