Forex news for Asia trading Wednesday 7 August 2019
On the Reserve Bank of New Zealand, read from the bottom up for chronology:
- Another bank says to expect further rate cut from the RBNZ, in November
- RBNZ Governor Orr says might have to do negative interest rates
- AUD and NZD extending their declines as RBNZ Governor Orr speaks
- RBNZ Governor Orr says today's interest rate cut does not rule out further action
- Another bank calling more RBNZ rate cuts ahead (November)
- Another RBNZ rate cut ahead - further cut in November on the way
- AUD dropping with the NZD
- NZD under 0.6450, big drop on the surprise from the RBNZ
- RBNZ cuts the cash rate by a whopping half a percent - NZD down a big figure
- RBNZ cut the New Zealand cash rate by 50bps, bigger than expected
Other:
- S&P on the yuan - more depreciation pressure ahead
- Australia home loans data for June 0.4% m/m (vs. expected 0.5%)
- PBOC sets USD/ CNY reference rate for 7 August 2019 at 6.9996 (vs. yesterday at 6.9683)
- FX option expiries for Wednesday August 07 at the 10am NY cut
- PIMCO still likes the yen - and more yuan weakness to come
- BOJ Summary of Opinions of the Monetary Policy Meeting on July 29 and 30, 2019 - full text
- More from China's Global Times - Trump lies have become bubbles flooding the US stock markets
- South Korea fin min says to take pre-emptive market stabilisation measures in case of herd behaviour
- Where to for the AUD/USD? KISS says lower.
- Australia July Construction PMI drops further: 39.1 vs prior of 43.0
- RBA on hold - two and done? Nope.
- The higher the USD goes the more upset US President Trump gets - raising prospect of dollar intervention
- North Korea comments on the launch of missiles
- Trade ideas thread - Wednesday 7 August 2019
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.
The 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).
