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Low inflation number clears the way for RBA cash rate cut.

Written by Sam Coxhead on April 24th, 2012.      0 comments

2:05 PM (NZT) Just released Australian inflation numbers came in lower than expected at +.4% vs .6% expected, and clearly opens the way for a 25pt cut to the cash rate from the RBA next Tuesday. Further cuts beyond 4.00% should not be ruled out in the coming months. The prospect of a lower cash rate for Australia should temper demand for the AUD overtime. Much of the expected RBA cut has already been priced in and this has tamed enthusiasm for the Australasian currencies over the last few weeks.
 
The RBNZ have their monetary policy meeting on Thursday and will not be making changes to monetary policy. Expect the benign inflationary environment to provide an opportunity for the RBNZ to talk down to the prospects of the NZ dollar to the benefit of exporters.
 
In offshore markets overnight the recently patchy outlook continued. Political disturbance in Europe from the Holland and France has added uncertainty to already fragile markets. European banking stocks have led the equity markets lower. The business US economic calendar starts later on today in what could prove to be an interesting and pivotal week. If sentiment continues to look fragile, expect the resurgence of calls for further quantitative easing from the likes of the FED and even the ECB to gather momentum. This would reinforce the continuation of the sideways price action in most markets  of the last month or two.
 
          Past 24 hours
  Current level Pre-AU CPI  % Chge since AU CPI   Low High
NZD/USD 0.8132 0.8130 0.02%   0.8083 0.8175
AUD/USD 1.0275 1.0325 -0.49%   1.0267 1.0369
NZD/AUD 0.7916 0.7879 0.47%   0.7862 0.7919
AUD/NZD 1.2633 1.2692 -0.47%   1.2628 1.2719
NZD/GBP 0.5045 0.5043 0.04%   0.5023 0.5071
NZD/EUR 0.6185 0.6181 0.06%   0.6160 0.6192
NZD/YEN 65.98 65.98 0.00%   65.60 66.61
NZD/CAD 0.8062 0.8065 -0.04%   0.8045 0.8122
 
 

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