Bell FX Currency Outlook: Both the Fed and the RBNZ leave rates unchanged, dragging the Australian Dollar lower.
Australia: Australian Q4 CPI inflation was a touch higher than expected yesterday, sending the AUD higher. Just announced at 7:00am this morning, the RBNZ has left the cash rates unchanged at 2.50%, noting that further deprecation would be appropriate (Fonterra a little earlier reduced its 2015/16 milk price forecast more than expected), and while core inflation is close to target, some monetary easing ahead may still be
required – a negative headlines for the NZD, pushing the AUD/NZD over 1.09 in response. The RBNZ noted that the domestic economy is expected to pick up in 2016, supported by construction activity, tourism, and
ongoing strong net immigration. However they remain cautious as numerous risks still exist around the outlook, so it’s easing bias became more explicit, stating “further policy easing may be required over the
Majors: As expected, the Fed left rates unchanged at 0.25-0.5%. The Statement laid out a clinical and fair summary of economic market developments since December lift-off, modifying their description of the
economy reflecting some slowing but with still strengthening labour market recognising generally higher levels of market volatility. They noted that “the Committee is closely monitoring global economic and financial developments”. The language on inflation was little changed, remarking that inflation continues to run below the target rate, in part due to oil prices, and further declines in energy costs are likely to see inflation remain soft over the near-term. Overall, the statement reflects the caution that one would expect a central bank to use in the current volatile environment.
Economic Calendar 28 JAN
- NZ Trade Balance Dec
- AU Import/Export Price Index Q4
- GE CPI Jan
- US Durable Goods Orders Dec
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