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Reserve Bank of New Zealand Expected to Cut 0.50 from Rate

by with No Comment AMT MarketsAssetsFeatured Highlights

Reserve Bank of New Zealand Expected to Cut 0.50 from Rate

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NZD/USD Six Month Chart as of 18th February 2025

NZD/USD Revival Mid-Term Coming? Reserve Bank of New Zealand is expected to cut its Official Cash Rate by 0.50 on Wednesday. N.Z govt is being proactive as they try to ignite the economy. The RBNZ also cut by 0.50 basis points in November. The central bank is expected to continue to remain aggressive tomorrow and suggest further cuts will be seen, perhaps via 0.25% afterwards.

The NZD/USD was trading around 0.63600 in late September of 2024 after gaining in correlation against the USD with the broad Forex market, via a bullish run which began in July. The NZD/USD is still traversing within its lower realms and it is logical to assume many financial institutions feel that support levels around the 0.56000 vicinity will prove rather durable going forward.

Day traders who believe the mid-term holds an optimistic bullish run for the NZD/USD may be correct, but speculators cannot be overly confident about a sustained surge higher quite yet. Conservative leverage is urged while looking for upside while betting. Speculators also need to remember tomorrow’s expected interest rate cut from the RBNZ has already been factored into the currency pair.

The rate cut is important for Wednesday, but it is the stance the Reserve Bank of New Zealand takes via its Monetary Policy Statement that affect behavioral sentiment among financial institutions. If the RBNZ sounds cautiously aggressive, meaning they suggest further cuts are being strongly considered this could help firm the NZD/USD and create more optimism regarding the potential for a move higher.

Yes, the shadow of the U.S White House administration looms over the Forex landscape. Decision making will remain tentative via financial institutions, but it is reasonable to suspect large players would treat clarity from the Reserve Bank of New Zealand with a positive Forex stance.

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Forex and Equities Storm: Crucial Data will Impact Markets

by with No Comment AMT MarketsBehavioral SentimentFeatured Highlights

Forex and Equities Storm: Crucial Data will Impact Markets

Today will start out with a rather important consumer report from the U.S and day traders should stay alert. It is easy to point to every day and week as being a crucial circumstance for speculators, because that is what gets their juices moving and gets them to wager in the markets.

However, given the rather choppy conditions in Forex seen since the last week of December and pointing to the results of the Consumer Price Index on the 13th of February and the storms created in FX, traders hopefully have enough muscle memory to remember how they felt in the midst of the whipsaw conditions which were experienced only two weeks ago.

Central bank outlooks are fragile among analysts and financial institutions. Simply put this week’s data could prove to be more important than the CPI numbers. Consumer sentiment, GDP, and inflation statistics are all on the U.S roll call this week.

Other geographies will make news too and impact global markets. Last week’s impressive results from Nvidia created another massive wave of positive momentum in equity indices. The Nasdaq 100, S&P 500 and the Dow Jones 30 all have hit record values. Japan’s Nikkei 225 has surpassed record heights.

Yet, other barometers do highlight caution abounds too, U.S Treasuries yields have edged upwards and are touching values which show there is nervousness regarding monetary policy from the U.S Federal Reserve. This week’s data will deliver more insights for investors, and Treasuries are certainly going to react to the economic reports.

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Gold One Month Chart as of 27th of February 2024

Gold has edged higher in the past week and is around the 2034.00 USD mark as of this writing. The slight climb above the 2020.00 ratio which has worked like a magnet recently, indicates some traders may be leaning optimistically towards a weaker USD mid and long-term. These folks may be proven correct, but day traders should note that the 2030.00 ratio in gold is below highs seen in December, January and early February – which indicates nervousness. If day traders do not believe gold acts as an inverse barometer for the USD, simply look at the results of trading when the stronger than expected CPI numbers were released on the 13th of February. Gold fell to a low near 1985.00 on the 14th, this was not a coincidence.

Again, while it is easy to sound alarms and jump up and down and proclaim every week important for day traders, the acknowledgement that this week’s economic data is significant should not be treated as hyperbole. You have been warned.

Monday, 26th of February, U.S New Home Sales – yesterday’s results showed another decline in the housing market, and the previous month’s number was revised downwards. The outcome may point to concerns about U.S mortgage rates which remain stubbornly high for those considering purchases.

Tuesday, 27th of February, U.S Durable Goods Orders – a rather large drop of minus -4.9% is expected. The Core data however is expected to produce a rise of 0.2%. These numbers will be a good precursor for the important consumer sentiment which will follow one and a half hours later.

Tuesday, 27th of February, U.S Consumer Confidence via the Conference Board – the results of the important readings have shown intriguing gains since late fall in 2023. While improvement in sentiment has been recorded, revisions lower have also been seen in the previous three reports. The outcome of today’s report should be treated carefully. If another higher reading is produced this may create some positive momentum in the USD momentarily.

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NZD/USD Three Month Chart as of 27th February 2024

Wednesday, 28th of February, Reserve Bank of New Zealand Official Cash Rate and Monetary Policy Statement – while many Forex traders will be sleeping when the RBNZ makes its important pronouncement, New Zealand inflation data has remained strong and a conservative government is in charge politically that is pro-business. The question is if the Reserve Bank of New Zealand will go against the grain of other global central banks and actually increase their interest rate while others seem to be adamant about trying to become less aggressive. While many analysts believe the RBNZ will sit on its hands and act according to the whims of others, if an interest rate hike is announced global Forex traders should take note because it would be a signal that central bankers are uneasy regarding their rhetoric and not in agreement.

Wednesday, 28th of February, U.S Preliminary Gross Domestic Product – a gain of 3.3% is the expectation from many analysts. The previous reading was stronger than anticipated. If growth numbers in the U.S come in higher than estimated the USD will react with strength. The Federal Reserve would like to see the outcome meet the expectation or come in below, this so the U.S central bank can consider reducing the Federal Funds Rate late this spring or in early summer. However, if a significantly strong growth number is demonstrated this would cause turmoil in Forex.

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EUR/USD Six Month Chart as of 27th February 2024

Thursday, 29th of February, Germany Preliminary Consumer Price Index – a slight gain is expected in the inflation number. The EUR/USD has been struggling as stagflation concerns shadow the European Union. A higher inflation result will not be welcomed by the ECB, which would prefer to cut interest rates sooner rather than later. The German number should be watched and it will cause an impact if there is a surprise. The EUR/USD has been turbulent and is likely to produce more choppy conditions depending on the parade of data results this week.

Thursday, 29th of February, U.S Core Personal Consumption Expenditures Price Index – traders who have felt the previous economic reports already have caused intense reactions this week should brace for this inflation report. A result of 0.4% is expected. The Federal Reserve admits this is one of the most important publications that it monitors. This means financial institutions react to this report too. If inflation were to come in higher than expected, like the CPI results from two weeks ago, this would essentially kill off expectations of a May interest rate cut from the Fed. The USD will react to this report and so will U.S Treasury yields, which means equity indices will also be affected. A weaker inflation report is being wished for by many market participants, but will this be the result?

Friday, 1st of March, China Manufacturing PMI – not to beat a dead horse, but China’s economic data has been poor and this report will be viewed as important. Another negative outcome is expected. Transparency regarding economic numbers from China is a worry for investors. Conditions in China are being watched and it is important for traders to eliminate bias regarding their perspectives. China may be struggling, but its importance as an economic power is still very much in evidence. Foreign direct investment into China is diminishing, but plenty of investors still have ‘skin in the game’ and will be affected by the manufacturing reports.

Friday, 1st of March, U.S Manufacturing PMI via ISM – a slightly improved manufacturing reading is expected. However, because of the U.S data releases from the previous days, the results may be looked at only momentarily and not cause much of a reaction from market participants. Traders may be looking forward to the weekend after this week’s economic publications in order to rest.

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Nervous Trading Results End of Last Week Serve as Caution

by with No Comment AMT MarketsBehavioral SentimentFeatured Highlights

Nervous Trading Results End of Last Week Serve as Caution

The end of last week saw mixed U.S inflation data and lingering nervous sentiment regarding outlooks about U.S Treasuries, create rather choppy conditions for day traders. Economic data this week should be more calm because there appears to be less significant risk events on the horizon. Financial institutions finished Friday within a USD buying mode, a bearish gold trend, and U.S stock indices declining – highlighting fragile conditions remain evident among larger market players.

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NZD/USD Six Months Chart as of 13th August 2023

Monday, 14th of August, New Zealand Business Services Index – this report may turn out to be the highlight of the day for some traders. The NZD/USD which will start tomorrow near values last seen in the middle of November of 2022, may find interested speculators glancing at the report. But the NZD is moving largely under a USD centric driven market, like most of the broad Forex market. Mid and long-term technical support levels are certainly in focus, and they have proven vulnerable recently as the NZD/USD trends lower.

Tuesday, 15th of August, China Industrial Production – economic data from the nation has been troubling regarding deflation. However, traders who lean towards a ‘Western’ bias should remember to keep their perspectives realistic, because weaker China economic results mean the global economy is struggling too. A slight decline in Industrial Production is expected. Weaker than expected numbers from China could indicate ‘soft’ demand via export partners.

As an aside financial institutions will keep their eyes on the China real estate market too, this as whispers about ‘Country Garden Services Holdings’ funding problems remain a talking point and potentially escalate. Values of properties are suffering from declines too in China and this is hurting the domestic economy.

Tuesday, 15th of August, U.S Retail Sales – a slight gain in spending by U.S consumers is expected to be seen. If the number can meet the anticipated gain of 0.4% the result may not spark too much volatility. If for some reason a higher outcome is produced, this could spark some concerns about U.S Federal Reserve rhetoric. Although it may seem counter-intuitive to some traders, a weaker number could help ignite some bearish selling of the USD.

Wednesday, 16th of August, New Zealand Official Bank Rate – the interest rate policy from the RBNZ is expected to remain in place. Although it should be noted both New Zealand and Australia have almost made it a habit to surprise investors over the past few months.

Wednesday, 16th of August, U.S FOMC Meeting Minutes – the report will be studied for clues regarding outlook. However, the Fed has a well-practiced ability to maintain tight lips and not disclose too much internal thinking, particularly when it comes to disagreement regarding policy – which is seemingly escalating in the Federal Reserve.

Thursday, 17th of August, U.S Weekly Unemployment Claims and Philly Fed Manufacturing PMI – in what has likely been a quiet week of data leading up to these reports, some analysts may try to get the attention of their clients regarding these results to create ‘noise’, but unless there is a strong miss the data is likely to simply be digested quietly into the broad marketplace.

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GBP/USD One Week Chart as of 13th August 2023

Friday, 18th of August, U.K Retail Sales – last week’s better than expected GDP numbers from Britain will make the outcome of this consumer data rather intriguing. The GBP/USD could find some impetus from the results. The estimate is calling for a decline of minus -0.4% compared to last month’s gain of 0.7%. The GBP/USD which went into last weekend near lows will likely find plenty of attentive traders as this new week comes to a close.

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Week Ahead: Inflation will be the Crucial Word for Investors

by with No Comment AMT MarketsBehavioral SentimentFeatured Highlights

Week Ahead: Inflation will be the Crucial Word for Investors

Last week finished with another reminder that inflation cannot be easily scoffed at by investors who continue to believe higher prices will eventually slowdown. Average Hourly Earnings last Friday came in above the expectation and this was enough to rattle Wall Street again, which saw the major equity indices decline and bond yields incrementally rise. Inflation ‘talk’ will remain important this week because of coming U.S data.

Real Estate including REITS becoming a Topic of Discussion as Mortgages Rise

Market watchers should also pay attention to news regarding mortgages on residential homes, and listen for troubles from the commercial real estate market, as these sectors deal with rising interest rates in the U.S and U.K. Increased nervousness within these markets could have an affect on behavioral sentiment. Let’s remember the catalyst for the financial crisis of 2007 was the real estate sector.

Which brings us back to inflation and the growing acceptance among investors the U.S Federal Reserve may be ‘forced’ to hike the Federal Funds Rate on the 26th of July, if price data continues to come in ‘hot’. Some investors will likely be heard saying an increase of 0.25% has already been factored into marketplace, but the prospect of another hike in late 2023 could be problematic. Forex, gold and bonds dynamics will tell us a lot when this week concludes regarding outlooks.

BNB/USD Price Should be Monitored as Binance Trembles

An outside source of financial and speculative news is likely to come from cryptocurrency. If you are gambling on this asset class (or should we say commodity based on hot air) and like the adventure of wagering, please continue to pay attention to Binance which is showing signs of duress. If the Binance cryptocurrency exchange shows additional signs of pressure on its BNB (Binance Coin), trading waters within the world of crypto could trigger additional drowning victims. If you thought the Sam Bankman-Fried story made interesting news last year regarding fraud and other criminal activity, the FTX saga could prove to be only the tip of the iceberg.

Data Events Ahead to Watch

Monday, 10th of July, China CPI and PPI – the inflation data could prove important for investors who correlate economic statistics from China into their global forecasts. Traders within India should pay attention to these Chinese price reports, because global investors are starting to shift their assets into the Nifty 50 and other NSE equities because of risk and reward equations.

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GBP/USD One Month Chart as of 9th July 2023

Tuesday, 11th of July, U.K Claimant Count Change and Average Earnings Index – the numbers need to be watched by GBP/USD speculators. The results from the U.K will be intriguing because of employment results, but more importantly for inflation concerns and the knock-on effects. Bank of England Governor Andrew Bailey is speaking a few times this week, and this includes Wednesday the 12th of July, when he will talk about the Financial Stability Report. The GBP/USD has moved towards monthly highs recently.

Wednesday, 12th of July, New Zealand RBNZ Official Bank Rate – NZD/USD day traders will want to pay attention to the central bank’s Rate Statement. While no increase of interest rates is predicted, the Reserve Bank of New Zealand at a minimum will likely have to admit inflation remains a concern.

Wednesday, 12th of July, U.S Consumer Price Index – the inflation reports from the States will have all eyes on the outcomes of the monthly and annual comparisons, including the Core numbers. The results from these inflation statistics will certainly cause momentary volatility within Forex with the USD as the focal point.

Wednesday, 12th of July, Canada BoC Overnight Rate – the Bank of Canada is expected to hike its interest rate by 0.25% to the 5.00% mark. USD/CAD will react to the BoC Rate Statement based on its outlook.

Thursday, 13th of July, U.K Gross Domestic Product – the ‘growth’ numbers are not expected to be positive. A drop of minus -0.3% is the expectation. Talk of recessionary pressures in Great Britain will be heard. Unfortunately, the discussion about a struggling economy, mixed with stubborn higher prices for consumers and mortgage rates that are rising will not make for calm stomachs. U.K equity results via the FTSE 100 Index should be monitored.

Thursday, 13th of July, U.S PPI – the Producer Price Index figures will be the last cog within the important inflation data for the week. Stubborn prices for wholesale goods are a concern, because the costs to consumers becomes more expensive when there are higher price pressures.

Friday, 14th of July, U.S Consumer Sentiment via the University of Michigan – if the Consumer Sentiment readings from the UofM report improves, and the U.S inflation data which was released earlier this week has proven stubborn, this could become a source of pain for investors who may be forced to consider the Fed will not only raise the Federal Funds Rate late July, but later in 2023 also. Short-term traders should monitor this report accordingly.