European Open Briefing

Global Markets:

  • Asian stock markets: Nikkei up 0.35 %, Shanghai Composite and Hang Seng both gained 0.30 %, ASX 200 rose 0.10 %
  • Commodities: Gold at $1242 (+0.25 %), Silver at $17.79 (+0.50 %), WTI Oil at $52.60 (+0.50 %), Brent Oil at $55.40 (+0.55 %)
  • Rates: US 10 year yield at 2.34, UK 10 year yield at 1.21, German 10 year yield at 0.30

News & Data:

  • RBNZ Keep Rates On Hold At 1.75%; NZD too high to be sustainable; Policy will continue to be accommodative
  • RBNZ say longer term inflation outlook well anchored at 2%; numerous uncertainties exist, may need to adjust policy accordingly
  • RBNZ push back the target date for reaching 2% inflation target by two quarters, now sees Q2 2019 (prev. Q4 2018)
  • Australia HIA New Home Sales (MoM) Dec: 0.2% (prev 6.1%)
  • Australia NAB Business Confidence (Q4): 5 (rev prev 6)
  • Japan Machinery Orders (MoM) Dec: 6.7% (est 3.0% prev -5.1%)
  • Japan Machinery Orders (YoY) Dec: 6.7% (est 4.5% prev 10.4%)
  • Japan Housing Loans (YoY) Q4: 3.1% (prev 2.7%)
  • UK RICS House Price Balance (Jan): 25% (est 22% rev prev 23%)
  • New Zealand Building Permits (MoM) Dec: -7.2% (rev prev -9.6%)
  • PBoC Fixes USDCNY Reference Rate At 6.8710 (prev fix 6.8849 prev close 6.8715)

Markets Update:

The New Zealand Dollar came under pressure overnight following the RBNZ rate decision. While the central bank left rates unchanged, the statement was more dovish than the market anticipated. The RBNZ said that the NZD is too high to be sustainable and that policy will continue to be accommodative. Further, the RBNZ pushed back the target date for reaching 2 % by two quarters, something that was not expected by the market.

NZD/USD fell from 0.73 to 0.7240 after the statement and extended losses to 0.7190 later in the session. Meanwhile, AUD/NZD rallied from 1.0445 to 1.0510 and later reached 1.06.

AUD/USD didn’t really benefit from the AUD/NZD flows though. The pair fell from 0.7645 in the early Asian session to a low of 0.7610.

The US Dollar strengthened against most other major currencies as well. The Euro is back below 1.07, while GBP/USD is consolidating around 1.25. USD/JPY rose from 111.70 to 112.30 amid a rally in Asian equity markets.

Upcoming Events:

  • 06:45 GMT – Swiss Unemployment Rate
  • 07:00 GMT – German Trade Balance
  • 13:30 GMT – US Initial Jobless Claims
  • 14:10 GMT – FOMC Member Bullard speaks
  • 18:30 GMT – Bank of England Governor Carney speaks
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