The New Zealand dollar danced to the tune of risk sentiment last week. Will the RBNZ’s policy decision give the comdoll its own moves?
RBNZ’s decision and presser (Feb 13, 1:00 am GMT)
The Reserve Bank of New Zealand (RBNZ) will be the only major central bank to publish its policy decision this week, so you can bet that a lot of forex traders will hang around to see what Governor Orr and his team have to say.
If you recall, the central bank kept its interest rates at 1.75% for a ninth month in a row last November. The RBNZ team also upgraded their inflation forecasts, though Orr highlighted acknowledged that their challenge is to lift inflationary pressures.
The takeaway from the announcement is that the central bank remains neutral and data-dependent, and that Orr isn’t taking a rate cut off the table especially if GDP underperforms.
This week analysts expect the RBNZ to keep its rates steady at 1.75% for another month.
The action will likely come from the central bank’s statement and projections, which is expected to fall in line with the bearish tone that a lot of other major central banks (including RBA!) have adopted in the past couple of months.
It also doesn’t help that New Zealand posted surprisingly weak labor market numbers last Friday, the government has trimmed its growth forecasts for the year, and that global economic growth has slowed down since the RBNZ last met in November.
Keep close tabs on the RBNZ’s rate hike schedule, which could reflect the central bank’s change in biases.
Oh, and don’t forget that the central bank will also print the inflation expectations for Q4 2018, and that Orr will conduct a presser an hour after the statement’s release.
Market risk sentiment
Another week, another chance to take cues from global risk appetite?
As we’ve seen in the past couple of days, the New Zealand dollar reacts to headlines related to Brexit and the U.S.-China trade negotiations. And, in the absence of other big economic themes, the comdoll can also take its cues from significant changes in lower-tier reports from other major economies.
Make sure you stay glued to the tube so you don’t miss any market-moving headlines coming your way!
Missed last week’s price action? Read NZD’s price recap for February 4 – 8!