Whattup, fellas! On Wednesday at 8:00 pm GMT the Reserve Bank of New Zealand (RBNZ) will publish its monetary policies for the month of November. What’s more, Governor Orr will conduct a presser an hour later!
What are traders expecting and how can you grab pips from the event? Here are points that might help:
RBNZ didn’t make a splash last time
As expected, the RBNZ kept its interest rates at 1.75% in late September. Turns out, central bank members didn’t feel too differently from the last time they shared their two cents.
They still believe that the direction of their interest rates “could be up or down,” and that they plan on maintaining their official cash rate (OCR) at current levels “through 2019 and 2020.”
The official statement further revealed that little has changed from the members’ projections back in August. Specifically, “consumer price inflation remains below the 2 percent mid-point of our target, necessitating continued supportive monetary policy.”
Unfortunately for Kiwi bulls and bears, the FOMC statement scheduled just before the RBNZ’s event drew most of the investors’ attention so the central bank statement didn’t really affect the Kiwi’s price action.
No changes expected this week
That’s right! Everyone and his momma are expecting Governor Adrian Orr and his team to maintain their rates for another month in November.
That doesn’t mean this month’s release will be a non-event, though!
For one thing, the central bank will also be releasing a quarterly statement which includes its updated projections on inflation, growth, and monetary policies.
All eyes will be on whether RBNZ members will take cues from the latest upside surprise in inflation data, or if they still believe that downside risks to growth are as bearish as they were back in August.
Oh, and have I mentioned that Governor Orr will conduct a presser an hour after the statement’s release?
This means that traders will have a chance to say “WTF?! Please explain.” if the central bank’s statement contains any bombshells that they need to clarify.
Watch out for other top-tier events!
As if a central bank decision isn’t enough catalyst for you, you should also remember that Americans are just hitting the polls today.
If Democrats take control of the House as pollsters believe, then we might see a selloff in equities as they potentially delay or oppose Trump’s policies.
But if Republicans manage to maintain their hold of the House, then we might see a repeat of the post-Trump election rally and see dollar-denominated assets shoot higher across the board.
And then there’s the FOMC statement scheduled less than a day after the RBNZ’s event.
While market analysts aren’t expecting changes from Governor Powell and his team, a confirmation of the central bank’s hawkish bias could push the Greenback higher across the board and drag higher-yielding currencies like the Kiwi lower.