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Sharp RBNZ rate cut drags New Zealand dollar lower

currency-newsSharp RBNZ rate cut drags New Zealand dollar lower
While markets had expected the RBNZ to cut interest rates at its August meeting the size of the 50bpt cut prompted the New Zealand dollar to slump sharply.

As the RBNZ took a more dovish outlook than markets had anticipated the strength of NZD exchange rates rapidly diminished, even though further policy action now seems unlikely.

The Australian dollar also came under pressure following the RBNZ’s move, with markets speculating that the Reserve Bank of Australia (RBA) may be forced to follow suit.

Even though RBA policymakers indicated less willingness to cut interest rates this was not enough to boost AUD exchange rates.

Thursday’s labour market data could also drag the Australian dollar down if employment fails to show signs of strengthening.

Disappointing business and consumer sentiment indexes could fuel additional AUD exchange rate weakness, meanwhile.

Unless July’s set of New Zealand PMIs demonstrate resilience economic activity the mood towards the New Zealand dollar could remain negative.
 
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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