Article Highlights

  • U.S. existing home sales down from 5.69M to 5.48M vs. 5.59M forecast
  • U.S. crude oil inventories up by 5M barrels vs. 1.9M forecast
  • Markets on edge after London terror attack in Houses of Parliament
  • RBNZ kept interest rates on hold at 1.75% as expected
  • RBNZ head Wheeler: Further depreciation of NZD needed to balance growth
  • RBNZ: Inflation to be variable but to reach 2% in the medium-term
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The Greenback was all over the place in the latest New York session as the currency simply reacted to country-specific data and headlines while European currencies and comdolls turned lower.

Major Events:

Risk aversion back in play? – The reported shooting in London’s Houses of Parliament spread jitters all over the markets throughout the trading session as investigators are treating the incident as a terror attack. In the U.S., market watchers are buzzing about the upcoming healthcare vote as the repeal of Obamacare could serve as a test of the Trump administration’s resolve and ability to follow through on their campaign promises.

U.S. stock indices ended mixed for the day, with the S&P 500 up 0.19%, the Dow 30 down 0.03% and the Nasdaq up 0.48%. Commodities were mostly lower for the day, dragged down by the larger than expected buildup in crude oil stockpiles according to EIA data. The report showed an increase of 5 million barrels in inventories versus the projected increase of 1.9 million barrels, keeping oversupply concerns in play.

RBNZ rate decision – As expected, the Reserve Bank of New Zealand kept rates on hold at 1.75%. Much of their announcement was a repeat of their earlier spiel, with Governor Wheeler citing that monetary policy should remain accommodative for a considerable period.

Central bank officials brushed off the recent Q4 GDP disappointment as a result of temporary factors, adding that their outlook remains positive based on expectations of strong population growth and high levels of household spending and construction activity. Policymakers acknowledged that the Kiwi’s trade-weighted index has fallen 4% since February, which is a good thing, but noted that further depreciation is needed to achieve more balanced growth.

When it came to inflation, RBNZ officials also acknowledged that headline CPI has returned to their target band thanks to the pickup in energy prices. They warned that headline inflation could be variable in the next few months but is expected to return to the midpoint of their target band in the medium-term.

Major Market Movers:

JPY –  The Japanese yen was the main beneficiary of the risk-off moves as traders also tried to steer clear of the U.S. dollar.

EUR/JPY dipped from the 120.00 area to a low of 119.68, GBP/JPY fell from 138.76 to a low of 137.80, AUD/JPY is down to the 85.00 mark, and NZD/JPY slid to a low of 78.02.

See also:

London Session Recap

Asian Session Recap

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