Flying Kiwi may get its wings clipped (video)

Currencies Direct April 29th 2015 - 2 minute read

Although most of the market’s attention will be focused on the US Federal Open Market Committee (FOMC) rate decision this evening (29 April), the real spectacle will be on the other side of world.

A few hours after the FOMC decision, we should brace ourselves for a dramatic change of direction from the Reserve Bank of New Zealand (RBNZ). In past sessions, RBNZ deputy governor Grant Spencer has issued repeated warnings about New Zealand’s economic and financial conditions and suggested that a rate cut is an option.

If his views are consistent with those of the rest of the RBNZ’s board, the Kiwi dollar could find that it can’t fly after all.

Greece: Europe starts to grin and bear it

Greece’s bond yields have dropped, its default swap premiums have tumbled, and Greece-based equities rallied hard over this past week. And yet still Greece’s financial frailties persist.

This state of affairs has gone on for so long now that the markets seem to be adopting an increasingly blasé attitude over the threat Greece poses to the Eurozone – perhaps because the so-called “contagion risk” has been reduced.

The market will watch the in-person meeting scheduled today (29 April) with much interest, and hunt for clues as to future developments in the Mediterranean.

Is Sterling headed for the bull ring or the bear pit?

Despite the UK high-tariff data across the wires yesterday (28 April), concerns about what lies ahead for the pound persist.

Latest Office for National Statistics numbers suggest that the economy grew 0.3% in the first financial quarter of this year. That was short of the predicted 0.5%, but at 2.4% the annual pace is still enviable on a global basis.

Sterling trades at 1.5371 against the US dollar this morning, and bang-on that crucial psychological level of 1.40 against the euro. But whether bullish or bearish, the pound is still at the mercy of next week’s election result.

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