Article Highlights

  • Chinese central bank lowered 7-day reverse repo rate
  • New Zealand Sept trade deficit at 1.22B NZD vs. 0.82B NZD forecast
  • New Zealand Aug trade deficit downgraded from 1.035B to 1.079B NZD
  • New Zealand Sept exports up 2.0%, imports down 1.3%
  • U.K. preliminary GDP reading up for release
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Retreat, higher-yielders, retreat! Comdolls and Asian equity indices erased their previous day gains, as risk aversion popped its head back in the forex market. The People’s Bank of China ain’t done with its easing spree since it decided to lower the 7-day reverse repo rate from 2.35% to 2.25% earlier today, hinting that their recent rate cuts aren’t enough to keep the Chinese economy afloat.

The Aussie is looking weaker against its forex peers, with AUD/USD down to the .7235 area (-0.14%) and AUD/JPY down 46 pips to 87.28 (-0.53%). The Japanese yen is taking advantage of these risk-off moves, advancing against the U.S. dollar and European currencies as well.

In New Zealand, the September trade balance showed weaker than expected headline results, as the deficit widened to 1.22 billion NZD instead of narrowing to the projected 0.82 billion NZD shortfall. To make things worse, the August data suffered a downgrade from the initially reported 1.035 billion NZD deficit to 1.079 billion NZD. However, underlying components of the report indicated that exports picked up by 2.0% in September thanks to rising beef shipments while imports dipped by 1.3%.

NZD/USD is down to .6775 after getting rejected at the .6800 resistance (-0.15%), NZD/JPY is down 44 pips to 81.73 (-0.54%), EUR/NZD is up 45 pips to 1.6320 (+0.27%) and GBP/NZD is up 63 pips to 2.2658 (+0.28%).

Pound pairs could enjoy a bit more volatility in the next few hours, as the U.K. is gearing up to print its preliminary GDP reading for Q3 2015. Analysts are expecting to see a 0.6% growth figure, slightly weaker compared to the previous period’s 0.7% expansion. Still, stronger than expected data could remind forex traders that the BOE is eyeing a potential rate hike sometime next year and allow the British currency to rally.

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