Kiwi plunges as RBNZ cuts rates leaving room for further cuts
- RBNZ Official cash rate cut to 2.75% from 3.0%
- UK RICS house price balance 53% vs. 46%
- Japan PPI y/y -3.6% vs. -3.2%
- Australia MI inflation expectations 3.2% vs. 3.7% previously
- Australia employment change 17.4k vs. 5.2k; unemployment rate 6.2% vs. 6.2%
- China CPI y/y 2.0% vs. 1.9%; PPI y/y -5.9% vs. -5.6%
- BoE votes to keep rates unchanged at 0.5%, MPC votes 1 – 8
- Canada NHPI m/m 0.1% vs. 0.2%; Capacity utilization rate 81.3% vs. 81.8%
- US Weekly unemployment claims 275k vs. 279k
- US Import prices m/m -1.8% vs. -1.7%
- US wholesale inventories
- Crude oil inventories
The Asian markets started off on a busy note with the RBNZ’s interest rate decision. The New Zealand Central bank cut its OCR lending rate by 25bps and left the room open for further rate cuts. The dovish statement sent the Kiwi dollar spiraling downwards as the currency was seen trading -1.4% lower for the day being the weakest currency pair for the day. Other data from early Asian session included the Australia jobs report which surprised to the upside with better than expected jobs and a dip in the unemployment rate from 6.3% to 6.2%. The Aussie dollar continued its rally gaining 0.8% ahead of the US trading session. The biggest mover was of course the AUDNZD.
Japan’s producer price index fell -3.6%. The currency was initially trading stronger but gave up the gains after comments from an LDP leader who said that the BoJ’s meeting on October 30th would be ideal for expanding the QQE program. The dovish comments come amidst the markets pricing in stimulus package from either China or Japan. The Yen was down -0.54% for the day ahead of the US trading session.
The European session was relatively light with the markets turning their attention to the Bank of England’s monetary policy statement. While the BoE left rates unchanged, the MPC vote count was also a non-event with Ian McCafferty being the sole dissenter in favor of a 25bps rate hike. The BoE’s statement sounded fairly confident that the UK economy remains robust despite headwinds from China and that the slowdown did not change the view of the policy makers. The Bank of England however lowered its Q3 growth forecasts from 0.7% to 0.6% while expecting inflation to remain under pressure for the near term. The British Pound initially surged on the news but started to give back its gains. GBPUSD was up 0.15% for the day.
There was no major release from Eurozone today and the Euro was trading largely flat with -0.08% losses for the day.