The Reserve Bank of New Zealand signals that its rate hike path will be longer and shallower than expected, sending the New Zealand Dollar lower.
- A few hours ago, the Reserve Bank of New Zealand held a policy meeting. As was near-universally expected, they left their interest rate on hold at 2.25% but delivered a dovish surprise by signaling that only one rate hike of 0.25% was expected by the end of 2026, and that the current path of rate hikes would take longer and be weaker than expected. This sent the New Zealand Dollar lower everywhere.
- The market mood is showing some minor risk appetite after earlier AI-related sales were shrugged off, with US equity indices like the S&P 500 and the NASDAQ 100 edging higher, and equity indices in Asia are mostly higher, notably the Japanese Nikkei 225 Index which looks set to close more than 1% higher on the day. Gold and Silver are edging higher, but this is just part of a consolidation pattern. It is notable that Gold is not respecting the 50% fib retracement and big round number at $5,000 as support anymore. While equity markets are still clearly bullish, all I expect from precious metals is choppy, ranging price action.
- Canadian CPI data released yesterday was just a tick lower than expected, with month-on-month CPI unchanged while an increase of 0.1% had been expected. The data had little effect, but might add to the dovish case slightly on US inflation.
- In the Forex market, the strongest major currency since today's Tokyo open has been the British Pound, while the weakest has been the New Zealand Dollar. The US Dollar has regained a little ground today, but is basically just consolidating.
- Japanese exports growth rose to a new 3-year high, driven mostly by exports to China. This can be taken as a sign indicating Japanese reflation, which would be bullish for the Yen. The Yen so far is down a little this week but has regained some ground. A drop would be a natural reaction to last week's excessive gain.
- Bitcoin is still looking essentially bearish as it keeps failing to break above the key resistance level at $71,762. At the time of writing, the short-term price action is consolidative as it holds above the support level at $66,773.
- There will be data releases due today concerning:
- US FOMC Meeting Minutes
- UK CPI (inflation) - expected to fall from an annualized rate of 3.4% to 3.0%.