RBNZ cuts rates but Kiwi muted. UK retail sales fall
Key Notes:
- RBNZ Official Cash rate, cut to 3%
- Greek government passes bailout vote
- Spain unemployment rate 22.4% vs. 22.8%
- UK retail sales -0.2% vs. 0.4%; y/y 4% vs. 4.8%
- UK core retail sales m/m -0.2% vs. 0.4%; y/y 4.2% vs. 5.1%
- Canada retail sales m/m 1.0% vs. 0.6%; core retail sales m/m 0.9% vs. 0.8%
- US weekly initial jobless claims 255k vs. 279k
Later
- ECB’s Weidmann speech
- US leading indicators
The Reserve bank of New Zealand slashed the overnight cash rate by 25 basis points, bringing the interest rates to 3% from 3.25% last month. Justifying the rate cuts, RBNZ Governor, Wheeler noted that the rate cuts were warranted due to softening economic outlook and low inflation which has been below the 1 – 3% target range band. He also reiterated the need for the Kiwi to depreciate further. The move by the RBNZ was widely anticipated since last month’s rate cut and thus, the Kiwi was largely muted to the news. The NZDUSD was in fact bullish, as the currency posted intraday gains to test daily highs of 0.6694 before easing back lower. However, the Kiwi gained 1.10% against the Greenback at the time of writing. More details on the RBNZ interest rate decision here.
The Aussie was trading sideways for the part as the currency posted intraday gains above 0.741 before easing back from the lows. For the day, the Aussie was trading almost flat against the Greenback. There were no major news releases from Australia today.
The Japanese Yen was initially stronger as the USDJPY fell to daily lows of 123.73 before the currency stabilized. The Greenback turned bullish from the daily lows to gain 0.13% for the day, trading back near the daily highs above 124.
The European trading session saw the Spanish unemployment rate, improve to 22.4%, beating estimates of 22.8%. The Euro was initially bullish against the Greenback and the gains were led by the news that the Greek parliament approved the second package of reforms. The latest reforms deals with managing the failed banks and speeding up the Greek justice system which were some of the conditions laid forth by the European lenders. The approval paves way for talks to resume for the 86 billion Euro loans required for Greece.
The Euro briefly tested the highs towards 1.10, but the test to this level was short-lived as prices turned sharply at the first instance. EURUSD now trades within the 1.10 and 1.09275 band and could potentially turn sideways for the next few days.
UK’s retail sales posted dismal numbers as the ONS data showed that retail sales for the month fell -0.2% while rising at a slower pace of 4% on an annualized basis. On the core retail sales front, the data was also negative as core retail sales fell -0.2% on the monthly and rose 4.2% on an annualized basis. The Pound Sterling was under pressure after the news was released. GBPUSD tested intraday lows to 1.5558 on the news.
The US trading session saw the release of the weekly US unemployment claims which managed to rise less than expected at 255k well below market expectations. The Greenback found renewed strength on the news release.
Canada’s retail sales for the month showed a positive print with the monthly retail sales rising 1%, above estimates of 0.6% and rising 0.9% on the core. The USDCAD was trading flat for the most part, but remains well supported above 1.30 after briefly testing lows to 1.29495
