The Reserve bank of New Zealand shocked markets on Tuesday with a more aggressive rate cut than had been expected. Analysts had been predicting that the RBNZ would cut its lending rate by 25 basis points, but the central bank surprised traders with a 50 basis points reduction. Adding fuel to the fire, they said in the statement that rates in negative territory were also being considered in the future, given their concerns about economic growth on the back of the US-Sino trade war. That news sent the Kiwi tumbling, and also pushed the Aussie Dollar lower, while demand for safe havens escalated.
As reported at 11;40 am (GMT) in London, the NZD/USD was trading lower at $0.6435, down 1.4079%; the pair earlier hit a trough of $0.63778, while the peak is a distant $0.65574. The AUD/USD was trading at $0.6733, down 0.398%, moving off the session low of $0.66774.
Japanese Yen Benefits from RNBZ News
The safe haven Japanese Yen bounced on the news, as did the Swiss Franc. Analysts are predicting now that the RBNZ is likely to lower the rate again at the November policy meeting, with the Australian central bank now likely to follow. The NZD/JPY was trading lower at 38.387 Yen, down 1.5846%, while the AUD/JPY was at 71.547 Yen, a loss of 0.5601%. The USD/JPY was lower at 106.2650 Yen, down 0.1522%, while the EUR/JPY was trading at 118.827 Yen, down 0.328%.