Today's trading session is likely to prove pivotal to the week's trading as a result of the scheduled CPI data reading from the US, the BoC's interest rate decision and the reaction to this morning's RBNZ decision.
The Reserve Bank of New Zealand left interest rates unchanged at 5.5%, in line with widespread expectations. Importantly, however, the RBNZ communicated that it would keep the OCR rate "at a restrictive level for the foreseeable future to ensure that consumer price inflation returns to its target range of 1 to 3 per cent per annum, while promoting maximum sustainable employment".
Start investing today or test a free demo
Open account Try demo Download mobile app Download mobile appThe immediate report following the Council's decision indicated that the RBNZ may already be moving towards the end of rate rises, however. Bankers communicated that New Zealand's monetary policy had reached tighter macro conditions earlier than in other world economies. In addition, domestic consumption is falling in line with expectations and the labour market is showing signs of stabilisation. Inflation dynamics are expected to decline in line with the path of the RBNZ forecasts, the bankers added.
The initial session saw high volatility on the NZDUSD pair immediately after the RBNZ decision. Quotations managed to test the area of recent local peaks on the H4 interval (chart below), nevertheless the early rallies were largely erased. The key for further trading will be today's CPI reading from the US, which will be one of the most important components creating future FOMC interest rate decisions. Analyst consensus is for the y/y reading to decline markedly from the momentum seen earlier, with m/m inflation accelerating slightly (core m/m inflation is expected to decline).
01:30 pm BST, USA - CPI inflation:
-
YoY. Expected - 3.1% y/y, Previously - 4% y/y
-
YoY Core. Expected - 5% y/y, Previous - 5.3% y/y
-
MoM. Expected - 0.3% m/m, Previously - 0.1% m/m
-
MoM Core. Expected - 0.3% m/m, Previous - 0.4% m/m
Source: xStation 5
This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.
