Asia Pacific Market Open – RBNZ, NZD/USD, US Dollar, Midterm Results, S&P 500, China Trade
- RBNZ leaves door open to cut, but NZD[1] little changed as rate hike outlook was unaltered
- US Dollar[2], S&P 500[3] gained during Wall Street trade after 2018 midterm election results
- Asian stocks may rally, sending JPY[4] lower. Chinese trade statistics may sour market mood
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The New Zealand Dollar failed to find a meaningful reaction from November’s RBNZ interest rate announcement despite the central bank leaving the door open to a cut. Rates were left unchanged at 1.75% as expected and the OCR forecast track was left unaltered. RBNZ Governor Adrian Orr noted that they could consider a rate cut if GDP falls short of their estimates.
It looks as though the stronger third quarter inflation and jobs report failed to significantly alter the 2019 implied RBNZ rate outlook[6]. Recent gains in the New Zealand Dollar were accompanied with near-term rate cut bets being taken off the table according to overnight indexes swaps below. In fact, Mr. Orr noted that oil[7] prices are boosting near-term headline inflation. Core CPI remains below their two percent target mid-point.
RBNZ Rate Cut Bets Now off the Table
The US Dollar trimmed losses in the aftermath of the 2018 US midterm election results during Wall Street trade as anticipated[8]. The Democrats took control of the
