Central bank more positive
The Reserve Bank of New Zealand kept its benchmark rate unchanged at 1.75%, as expected, but brought forward its projection of a rate hike to Q2 2020 as it anticipates a pickup in growth over 2019. However, the Bank said it was necessary to keep rates at an expansionary level due to below-target inflation (which it doesn’t see picking up until December 2019).
NZD/USD climbed to its highest level since July 31 after the announcement, helped along the way by a slightly weaker US dollar. However, taking some of the steam out of the rally, RBNZ Governor Orr later commented that he was not taking a rate cut off the table, and would consider one if GDP growth fell short of forecast.
NZD/USD Daily Chart
Aussie rebounds as China’s imports beat estimates
China’s trade surplus increased to $34 billion in October, failing to match forecasts of a $35 billion surplus, as imports surged 21.4% y/y and exports expanded a lesser 15.6%. Between January and October, China’s exports to the US rose 8.7% in yuan terms compared to a year ago, while imports rose just 3.7% in the same period.
The Aussie rebounded from intra-day lows at 0.7265 versus the US dollar after the data, and is currently at 0.7279. AUD/USD is attempting to maintain a foothold above the 100-day moving average, having closed above it yesterday for the first time since March 15.
AUD/USD Daily Chart
FOMC non-event likely
Later today the US Fed convenes its November monetary policy meeting, with no change in rates expected by the markets. The next hike is reserved for the December meeting with markets currently pricing in a 78% chance of a fourth 25bps rate hike this year. The only excitement may come from comments on the economy, the labor market or the impact of the trade war.
Prior to the US meeting, we see Germany’s trade data, though this is from September and is relatively out-dated. Speeches are scheduled from ECB’s Coeure and Draghi and Swiss National Bank’s Maechler.
You can view the full MarketPulse calendar at https://www.marketpulse.com/economic-events/
NZD/USD – Bullish move gathering momentum (video)