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Risk-taking was the name of the game during the Asian session, but Kiwi traders missed the party after the RBNZ printed a dovish statement.

  • U.K.’s RICS house price balance dips from 0% to -8% in April
  • BOJ’s Summary of Opinions: continue to “pursue powerful monetary easing”
  • BOJ: necessary to explain meaning of “exit” and “normalization”
  • Japan’s current account surplus improves from 0.96T JPY to 1.77T JPY in March
  • China’s CPI (y/y) dips from 2.1% to 1.8% vs. 1.9% expected in April
  • China’s PPI (y/y) up from 3.1% to 3.4% as expected in April
  • Japan’s Economy Watchers Sentiment up from 48.9 to 49.0 in April

Major Events/Reports:

RBNZ’s dovish surprise

As mentioned in my U.S. session recap, the Reserve Bank of New Zealand (RBNZ) decided to keep its rates at 1.75% as many had expected.

However, not a lot saw that the central bank would also downgrade its inflation forecasts AND push back its inflation target outlook.

Meanwhile, in a follow-up presser Governor Adrian Orr revealed that “The direction of our next move is equally balanced, up or down. Only time and events will tell.

Orr mentioned that growth and employment remain near their sustainable levels but inflation is still below the 2% mid-point of the RBNZ’s target range.

As a result, he and his friends could afford to keep the OCR “at this expansionary level for a considerable period of time,” as it’s the best the central bank can do for “maximising sustainable employment and maintaining low and stable inflation.

Overall, Kiwi traders appreciated Orr’s clear and direct delivery. Unfortunately, they didn’t much care for the message.

Overall risk appetite

Risk-takers partied in streets today as a combination of slight dollar weakness and rising oil prices inspired investors to take on higher-yielding bets. Of course, it also helped that countries other than the U.S. are working on keeping Iran’s nuclear deal anyway.

  • Nikkei is up by 0.32% to 22,480.0
  • Australia’s A SX 200 is down by 0.18% to 6,108.7
  • Hang Seng is up by 0.88% to 30,805.9
  • Shanghai index is up by 0.19% to 3,165.105

Even precious metals got in on the risk appetite train as a small pullback for the Greenback boosted gold prices, while a larger-than-expected draw in EIA’s crude oil stockpiles and lingering concerns over Iran’s sanctions propped the Black Crack even higher.

  • Gold is up by 0.11% to $1,313.90
  • Brent crude oil is up by 0.57% to $77.77
  • U.S. WTI is up by 0.65% to $71.70

Major Market Mover(s):

NZD
Kiwi traders continued digesting the RBNZ’s surprisingly dovish statement and presser. And with no other major catalysts on the docket, the intraday trend extended until well after the events.

NZD/USD is down by 61 pips (-0.87%) to .6919
NZD/JPY is down by 65 pips (-0.84%) to 75.93
AUD/NZD is up by 109 pips (+1.02%) to 1.0790
NZD/CAD is down by 89 pips (-0.99%) to .8880
EUR/NZD is up by 166 pips (+0.98%) to 1.7143
GBP/NZD is up by 211 pips (+1.09%) to 1.9603

Watch Out For:

  • Swiss, French, and German markets out on Ascension Day holiday
  • 8:00 am GMT: ECB’s economic bulletin
  • 8:00 am GMT: Italy’s industrial production (0.4% expected, -0.5% previous)
  • 8:30 am GMT: U.K.’s manufacturing production to remain at -0.2%?
  • 8:30 am GMT: U.K.’s goods trade balance (-11.2B EUR expected, -10.2B EUR previous)
  • 8:30 am GMT: U.K.’s construction output (-2.1% expected, -1.6% previous)
  • 8:30 am GMT: U.K.’s industrial production estimated to maintain 0.1% growth
  • 11:00 am GMT: BOE’s Super Thursday event. Make sure you read Forex Gump’s latest trading guide!