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No surprise from the RBNZ as the cash rate is left at 2.50%.

Written by Sam Coxhead on September 13th, 2012.      0 comments

10:00 AM (NZT) The RBNZ just left the NZ cash rate unchanged at 2.50% in what was Governor Bollards last monetary policy announcement. Dr Bollard commented that their forecasts are for the cash rate to remain at the record low level for up to a year in the future. He also commented that whilst the growth rate in NZ was moderate, the NZ economy is better placed than many in the OECD.
 
The NZ dollar is slightly stronger than it was pre announcement and remains in demand following the positive events so far this week. Over night the German Constitutional court made its crucial ruling in favour of the European Stability Mechanism (ESM). This represent the jumping of one of the two event hurdles for the week by the market and saw the EURO in continued demand and the US dollar under broad pressure.
 
Later on today the Federal Reserve make their monetary policy announcement and the market has priced in full expectations for further stimulation to boost growth. Given the recent move lower by the US dollar, the risk appears to be of the FED under delivering and we see some kind of relief rally from the US dollar.
 
I have copied the appropriately brief statement from the RBNZ below.
 
Date 13 September 2012
The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 2.5 percent.
Reserve Bank Governor Alan Bollard said: “New Zealand’s economic outlook remains broadly consistent with that described in the June Monetary Policy Statement.
“New Zealand’s trading partner outlook remains weak. Several euro-area economies are in recession and Chinese growth has slowed. The risk of significant deterioration in the euro area persists.
“Domestically, the Bank continues to expect economic activity to grow modestly over the next few years. Housing market activity continues to increase as forecast, and repairs and reconstruction in Canterbury are expected to further boost the construction sector. Offsetting this, fiscal consolidation is constraining demand growth, and the high New Zealand dollar continues to undermine export earnings and encourage substitution toward imported goods and services.
“Underlying annual inflation, which recently moved below 2 percent, is expected to settle near the mid-point of the target range over the medium term.
“It remains appropriate for the OCR to be held at 2.5 percent.”

 
 
 
          Past 24 hours
  Current level Pre-RBNZ  % Chge since RBNZ   Low High
NZD/USD 0.8208 0.8200 0.10%   0.8075 0.8237
AUD/USD 1.0466 1.0466 0.00%   1.0318 1.0507
NZD/AUD 0.7845 0.7838 0.09%   0.7803 0.7843
AUD/NZD 1.2747 1.2758 -0.09%   1.2750 1.2816
NZD/GBP 0.5097 0.5100 -0.06%   0.5049 0.5108
NZD/EUR 0.6363 0.6366 -0.05%   0.6321 0.6391
NZD/YEN 63.90 63.90 0.00%   63.20 .64.11
NZD/CAD 0.8010 0.8016 -0.07%   0.7888 0.8010
 
Topics: RBNZ NZ dollar
 

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