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USD may rise on Fed speeches, RBNZ expected to leave rates on hold

business-articlesUSD may rise on Fed speeches, RBNZ expected to leave rates on hold
  • USD investors await Fed speeches
  • RBNZ likely to leave rates on hold
  • Uptick in Chinese imports may strengthen AUD, NZD
Fed speeches may impact USD

A number of Federal Reserve policy makers are expected to speak later this afternoon, starting with New York Fed President William Dudley.

Speculation has been running rampant this month that the Fed could raise interest rates as many as four times this year following a slew of upbeat US data.

However, at the same time the sudden plunge in stock markets on Monday has thrown some doubts on whether the Fed can accelerate the pace of monetary tightening.

Given this uncertainty investors will likely be eager for some clarity from policymakers on where they stand on further monetary tightening this year, with USD likely to jump if the majority come out in support of additional rate hikes in 2018.

RBNZ to hold first policy meeting of the year

All eyes will be on the Reserve Bank of New Zealand (RBNZ) later today as it hold its first policy meeting of 2018.

While there has been considerable speculation regarding possible monetary tightening from other major central banks this year, there has been little said in regards to the RBNZ.

In fact the RBNZ appears to be the only central bank from which markets are expecting nothing.

Instead the bank is expected to repeat the language used in November’s policy meeting, although it may warn over the threat posed by the New Zealand dollar’s recent strength. 

Chinese imports forecast to jump

China will publish its latest trade figures overnight, with AUD and NZD both likely to receive a boost if imports rise as expected.

With China being the main destination for the majority of both Australia’s and New Zealand’s exports, forecasts that imports will have climbed 9.8% in January are likely to bolster the two currencies.

Rising demand in China could also provide a bump for commodity markets as well, something that would also be well received by both the ‘Aussie’ and the ‘Kiwi’.

Upcoming Data

Wednesday, 7 February, 2018
13:30                     USD Fed Dudley Speech
20:00                     NZD RBNZ Rate Decision

Thursday, 8 February, 2018
03:00                     CNY Trade Balance
 
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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