Forex news for Asia trading on Wednesday 14 July 2021

The Reserve Bank of New Zealand 'minor' policy review today resulted in the Bank announcing an end date to additional purchases for their QE program, the Long Term Asset Purchasing (LSAP) scheme. When I say 'announced an end date', its at the end of next week! The program will finish on July 23. This is a more hawkish outcome than was expected from the meeting, expectations had centred on a change in language from the Bank to less dovish. Well, we got that, and a significant slice of more.

NZD/USD had been inching a little stronger into the meeting, not by much but noticeable, and upon the Bank's announcement, it jumped 30 points or so and has since extended its gain to highs circa 0.7020.

Last week we had strong economic data from New Zealand (you'll recall the QSBO) that triggered a cascade of rate hike forecasts being moved to November of this year (from around August of 2022); all four of New Zealand's largest four banks with that projection. After today's RBNZ market pricing for that Nov. Hike is now fully priced in.

Note that there are plenty of meetings between now and November though, market pricing is indicating each and every one of them is now 'live' to some extent, August is a 50/50 probability according to OIS (ASB have changed their forecast from November to a hike in August).

Forex news for Asia trading onWednesday14July 2021

News elsewhere was non-impactful. The coronavirus situation in Australia's largest capital has resulted in a 2 week lockdown extension for the city (ps. that'll be 'at least' another two weeks IMO). Note that Sydney's lockdown is fairly soft and may need tightening ahead to combat the spread. Speaking of spread, neighbouring southerly state of Victoria has reported 7 new cases today linked to the outbreak in Sydney/NSW.