Summary:

  • RBNZ leaves rates unchanged in line with forecasts and makes subtle changes to the statement
  • AUD trades a tad lower despite solid labour market numbers
  • Donald Trump is expected to sign around $50 billion of tariffs against China on Thursday

It was a hot period of time with monetary policy decisions coming from the Fed and the RBNZ. The two central banks met market expectations as the former lifted rates while the latter stayed on hold. As a result the NZDUSD dribbled higher, however, the RBNZ verdict had just a tiny effect on the currency market. One of the most dovish phrase put into the statement was that inflation is anticipated to weaken further in the near-term due to softness in food and energy prices, adjustments to government charges. It underlines that the New Zealand’s central bank is not in a rush to begin hiking rates any time soon. On the flip side, the communique omitted a mention concerning the ex-change rate nevertheless it seemed to be natural taking into account that the NZD TWI has barely changed in the first quarter averaging at around 75 – this is exactly the point the RBNZ had estimated. A response seen in the currency market was benign to say the least as there were no surprises at all. The interest rate market does not see the RBNZ lifting rates at least to the end of this year as the likelihood of such a move in December is hovering nearby 30%. Finally, let’s add that it was the last meeting with acting governor Grant Spencer as he will be replaced with Adrian Orr on 26 March.

link do file download linkA weekly time frame of the NZDUSD seems to suggest we’re moving at around a crucial technical support underpinned not just by a local demand zone but by the long-term upward trend line as well. Therefore, once the pair is able to stay above this area till the end of the current week, it would lead to a grater rebound toward 0.7400. Source: xStation5

Antipodean currencies undoubtedly stole the show overnight, and apart from the NZ dollar its major counterpart from Australia was offered some macroeconomic readings too. On the surface, the Australian jobs report disillusioned at least to some extent, however, when we delve into the details it does not turn out as bad as it seems. Admittedly overall employment grew 17.5k missing the consensus at 20k, albeit it was led solely by full-time jobs surging as much as 64.9k. It means that part-time employment shrank 47.4k but both trends kept their upward momentum in February.

link do file download linkBoth full- and part-time employment sustained their impressive momentum last month. Source: Macrobond, XTB Research

Otherwise, the jobless rate inched up from 5.5% to 5.6% nonetheless it was offset by an increase in the labour force participation rate rising by 0.1% to 65.7% reaching its fresh record. One may draw conclusions that getting more people are coming back to labour force implying the improvement is becoming more and more widespread. Did it change the backdrop for monetary policy there? Not particularly as the interest rate market still assigns just 30% odds for a rate rise until the end of 2018.

link do file download linkA false breakout made traders confounded. The pair looks to be ready to resume its uptrend while the long-term trend line (blue) should serve as the last resort for bulls. Source: xStation5

The US dollar remains on the back foot in early trading meanwhile US President Donald Trump is expected to sign around $50 billion of tariffs against China over intellectual-property violations on Thursday according to Bloomberg. The step taken by the Trump’a administration is to target more than 100 different types of Chinese goods whereas the value of them was set based on US estimate of economic damage sparked by intellectual-property theft by China. The announcement is scheduled for today at 4:30 pm BST.