Article Highlights

  • FOMC proceeds with “cautious taper”
  • RBNZ kept interest rates unchanged at 2.50%
  • New Zealand building consents up by 7.6%, upward revision to 12.5% in previous figure
  • New Zealand visitor arrivals show 0.2% increase, previous month reading revised up to 3.3%
  • Japanese retail sales weaker than expected at 2.6% vs. 3.9% consensus, 4.1% previous
  • Australia HIA new home sales down by 0.4%
  • Australian import prices show 0.6% decline instead of estimated 1.5% rise
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A lot happened in the forex arena over the past few hours, sparking additional volatility for most currency pairs. First up, the FOMC statement showed that the Fed proceeded with its “cautious taper” by reducing monthly bond purchases by $10 billion. Policymakers also reiterated that they will keep interest rates at their current levels until the jobless rate falls below 6.5% and inflation stays below 2%.

Over in New Zealand, the RBNZ decided to keep monetary policy unchanged for the time being and hold interest rates at 2.50%. Based on the Kiwi’s reaction, several traders were actually expecting a rate hike and sold the currency off after the announcement. Data from New Zealand however, turned out to be promising as both building consents and visitor arrivals showed improvements and their previous month’s readings were revised higher.

As for Japan, consumer spending turned out weaker than expected, with the annual retail sales figure falling from 4.1% to 2.6%. This was lower than the estimated 3.9% increase in retail sales, prompting many to speculate that the sales tax hike in April will further hurt demand.

Last but not least, Australia released its HIA new home sales report and showed a 0.4% decline while its import prices also printed a 0.6% decline instead of the estimated 1.5% rise.

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