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ForexLive Asia Wrap: RBNZ hikes rates again – NZD falls out of bed

Forex trading headlines for Asia Thursday 24 July 2014

Reserve Bank of New Zealand cash rate announcement – rate hike of 0.25%

I’ll skip quickly over JPY, EUR, GBP, CHF and CAD … not where the action was today at all (though USD/CAD caught a bid and did manage a 20 point or so gain during the timezone).

The session opened with eyes looking out over the South Pacific to New Zealand, where an announcement on monetary policy from the Reserve Bank of New Zealand was scheduled. The market ws overwhelmingly expecting another rate hike, and they weren’t disappointed. What was surprising, though, was the shift in gear from the central bank re the outlook for further hikes. A pause was expected until December, and this would now seem to be the earliest it can happen, with the bank saying clearly it was time now to assess the impact of the recent rises. Make no mistake, though, the RBNZ is in tightening mode, not neutral and they will be looking for reasons not to hikie – more details at the bullets, above.

The NZD was marked 80-odd points lower immediately on the announcement, with the less hawkish statement and also a ‘sell the fact’ response being labelled as the reason why. It managed a very small bounce from 0.8600 but is under there as I type, with suggestions now doing the rounds that the time is ripe for the RBNZ to intervene to push the currency down further (again, see bullets, above).

Meanwhile, AUD/USD drifted a little lower from very early highs, but jumped above 0.9460 on the HSBC China PMI release, finding sellers then ahead of 0.9470.

In the half hour or so leading up to the China data gold was sold heavily, to below $ 1300, where it stabilized somewhat but is back on session lows as I type. Oil traded quietly in a tight range.

ForexLive