The New Zealand dollar is the laggard as the RBNZ cuts rates by 50 bps
Now, that's how you do a rate cut. The larger-than-expected cut (markets expected a 25 bps move) has seen the kiwi fall off strongly with declines of nearly 2% against the dollar as we look towards the European morning.
RBNZ governor Orr also didn't rule out negative interest rates and that is keeping the kiwi from finding any relief despite the sharp drop from the central bank decision.
The aussie is also brought lower as domestic bonds surged and markets now see an increased chance for the RBA to keep up with the RBNZ in September.
The odds of a 25 bps rate cut by the RBA has jumped from ~47% yesterday to ~68% now following the RBNZ decision earlier today.
The more dour risk sentiment in markets is also not helping the aussie and kiwi today as the yen gains alongside bonds on the session. This comes as the yuan is weakening after the PBOC hinted at further fixing weakness in the currency.
The changes across other major currencies are much more measured as the dollar remains mixed in trading so far.
Looking ahead, it's still all about the risk mood and the US-China trade rhetoric for now. As such, expect markets to stay mixed with a bit of a defensive posture before we get any fresh developments to shake things up.
