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Market focus shifts to Reserve Bank of New Zealand rate decision - ‘Super Thursday’ looms

business-articlesMarket focus shifts to Reserve Bank of New Zealand rate decision - ‘Super Thursday’ looms
  • USD: Outlook positive - US PPI ahead
  • GBP: Outlook mixed – BoE rate decision in the spotlight
  • NZD: Outlook poor – RBNZ expected to leave rates on hold
US Dollar (USD) exchange rates expected to maintain lead on quiet data day

Whilst investors are largely waiting for Thursday’s US inflation, wage growth and jobless claims readings, today’s US mortgage applications results and producer price index (PPI) changes should give markets something to chew over in the meantime.

Investors currently predict that the headline PPI figure will ease in April month-on-month from 0.3% to 0.2%, but the yearly reading is expected to accelerate from 3% to 3.1%.

There are a few notable differences between PPI and the consumer price index (CPI) reading, but PPI essentially exists to detail different aspects of economic activity.

It is also used to calculate real growth - whilst CPI is used to calculate changes in the cost of living.

As a result, Thursday’s CPI reading will be far more influential, but the PPI result should act as something of a precursor ahead of the release.

RBNZ meeting: New Governor, same cautious tone?

The Reserve Bank of New Zealand (RBNZ) is set to announce its rate decision this evening, with policymakers widely expected to keep things on hold.

In this regard, NZD movements will largely be driven by the accompanying statement and the updated economic forecasts.

With the broader policy message expected to remain neutral, it seems unlikely that the new Governor will be rocking the boat.

This is predominantly due to ongoing weakness in New Zealand inflation – a problem underlined yesterday by the gloomy NZ business inflation expectation release.

BoE rate decision looms – what can we expect for GBP?

There’s very little on the UK’s data calendar today, but Thursday’s looming rate decision and the raft of accompanying data bears mentioning.

Analysts are no longer expecting the Bank of England (BoE) to raise interest rates at this meeting, with weak Q1 GDP growth and the recent disappointing run of PMI results liable to make the Monetary Policy Committee (MPC) tread cautiously.

Strength in the UK’s labour market and above-target inflation could keep the accompanying statement balanced, however, with a rate hike later this year still on the table.

Keep an eye on the March production data and the NIESR GDP estimate, as these could also push GBP up or down.

Upcoming data

13:30 USD – US PPI (April)
15:30 USD – US Wholesale Inventories (Mar)
22:00 NZD – NZ Interest Rate Decision
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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