Forex Market Review (Asian Session) – Kiwi drops to 11-month low after RBNZ; pound steady ahead of BOE

Forex Market Review (Asian Session) – Kiwi drops to 11-month low after RBNZ; pound steady ahead of BOE

The New Zealand dollar under-performed after neutral RBNZ policy outlook.  Sterling was steady ahead of the Bank of England meeting and release of the BOE inflation report.

The kiwi tumbled to an 11-month low against the greenback as the RBNZ noted lack of inflation pressure in the economy and indicated it would keep rates low for an extended period. The Bank left rates at 1.75%, which was widely expected, but the markets were hoping for a more hawkish stance with respect to inflation. The central banks sees inflation slowing and supported its view not to raise rates soon as this would undermine growth.

Markets will now focus on another central bank meeting scheduled for later today. The Bank of England’s Monetary Policy Committee (MPC) will be deciding on monetary policy. While the BOE is not expected to change the current 0.25% benchmark interest rate or alter the QE program, what would be interesting to watch will be BOE Governor Mark Carney’s speech and the Bank’s quarterly Inflation Report.

The pound was steady against the dollar during the Asian session, trading in a range just above $1.2925. The euro moved back above the 84 pence level against the pound.

The euro rebounded off a 2-week low of $1.0852 touched yesterday, and edged higher in Asia to reach a session high of $1.0885.

The dollar consolidated near a 2-month high against the yen, remaining above the 11-yen handle during the Asian session.

The Canadian dollar weakened against its US counterpart after news that Moody’s downgraded six Canadian banks. The dollar / loonie pair rose to a session high of $1.3742 from the Asian open of $1.3653.

Oil extended gains for a second day, with WTI prices reaching $47.82 a barrel.

Gold was steady around $1,221 an ounce.

Source: Trade Forex with XM.

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