RBNZ cuts interest rates to 1.5% – Kiwi drops below 66 US cents
Thursday 9 May, 2019
Daily Currency UpdateNZD - New Zealand DollarThe New Zealand dollar opened at 66 US cents on Wednesday morning and saw a decline during the afternoon following the decision by the RBNZ to cut interest rates by 0.25%. The Kiwi saw an immediate plunge to 0.6525 following the surprise decision to cut to 1.5% given markets analysts were pricing a 40% chance of a trim.Citing low inflation and a slowing economy both domestically and globally, this was the first cut since November 2016 with markets now pricing an 80% chance that the RBNZ is likely to cut another 25 basis points by February 2020. The Sino-American trade war continued to be the main theme on investor minds overnight as equity markets were whippy. Any chance of gains back into the 66 US cent region were erased as tensions linger between the two countries.From a technical perspective, the Kiwi currently is trading at 0.6575. We continue to expect support to hold on moves approaching 0.6500 while now any upward push will likely meet resistance at 0.6620.
Key MoversThe US Dollar was flat against a basket of currencies as investors maintained their positions in the lead up to further trade talks this week between China and the United States. The DXY traded in a tight 20-point range, weakening by a meagre 0.08% and sits at 97.50 this morning.Cable was one of the worst performers overnight seeing a full cent drop overnight from 1.31 to 1.30. Both trade tensions and Brexit negotiations have hit the Great British Pound this week as it declined from last weeks close of 1.3180. Fading hopes of a cross-party agreement between Conservatives and Labour Party show no sign of improvement.Markets shift its focus to Chinese inflation print today plus this evenings United States PPI and unemployment claims.
- NZD/USD: 0.6520 - 0.6650 ▼
- NZD/EUR: 0.5840 - 0.5920 ▼
- NZD/AUD: 0.9360 - 0.9480 ▼
- GBP/NZD: 1.9600 - 2.0000 ▼
- NZD/CAD: 0.8800 - 0.8940 ▼