ForexLive Asia FX news wrap: NZD smashed on RBNZ stunning 50 bp rate cut

Author: Eamonn Sheridan | Category: News

Forex news for Asia trading Wednesday 7 August 2019

On the Reserve Bank of New Zealand, read from the bottom up for chronology: 

Other:

The Reserve Bank of New Zealand was expected to reduce the cash rate today but managed to surprise the market with the magnitude of the cut. While 25bp was built in to expectations the RBNZ delivered a 50 point cut, sending NZD/USD (and kiwi crosses) much lower. Governor Orr followed up the dovish announcement with further dovish comments in his press conference an hour later, even saying negative rates are a possibility (although not a probability at this stage). To put the 50 basis point in context, this direct quote from Westpac after the decision:

  • This was a stunning decision
  • the only times the OCR has been cut by 50bps or more have been after the 9/11 terrorist attack, during the GFC, and after the Christchurch earthquake

NZD/USD extended its decline during Orr's presser toward 06375 while the Australian dollar dropped heavily with the kiwi, to its lowest in ten years circa 0.6680.

Forex news for Asia trading Wednesday 7 August 2019The RBNZ was not, of course, the only game in town today. Eyes were once again on the  People's Bank of China reference rate setting for the onshore yuan. The Bank dangled out a teaser, setting it just under 7 at 6.9996 for the session. While very weak (for the CNY) the rate was basically as was expected by the market. 

Nevertheless, we have seen continued flow into yen, and a lower offshore yuan. 

Gold was a strong performer on the session, spot to highs of USD1490 while futures cracked above 1500 (COMEX).


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