RBNZ Monetary Policy Review: Play it again Sam!

The Reserve Bank left the Official Cash Rate unchanged at 5.5 % as universally expected by market analysts and as largely priced by financial markets.

Soft US CPI is Not Enough

The US dollar extended losses after breaking a long-term ascending channel base yesterday. The British pound rallied on yet another stronger than expected wages growth data released yesterday morning. Average weekly earnings excluding bonuses increased 7.3% in the three months to May. And although the unemployment rate ticked up to 4%, it was because more Brits started looking for jobs, and not because people lost the jobs they had.

Core Inflation Over Time Will Justify Higher for Longer Paradigm

Despite the Fed recently indicating a likely further tightening, the ST market dynamics apparently hopes that a softer figure might reopen the debate on the amount of Fed tightening. We hold to the view that core inflation over time with justify the higher for longer paradigm. However, a softer than expected June figure still might extended the post-payrolls dynamics (‘technical correction’) in US yields in the dollar. The EUR/USD 1.1095 top might come on the horizon.

Caution Ahead of US Inflation Release, RBNZ May Be Done With Hikes

Any hopes of another pause from the Fed this month have dwindled in recent weeks as the data simply hasn't delivered what it needed to in order to convince the FOMC to do so for a second consecutive meeting. A second pause would be taken as a sign that the tightening cycle is over so it's not a decision that would be taken lightly.

Standard Chartered Predicts Bitcoin at $120k

The value of the largest cryptocurrency could reach USD 50,000 this year and USD 120,000 by the end of 2024, according to analysts at Standard Chartered, Reuters reports.

Risk Assets Hope for Slowing Inflation

Today’s US inflation data release is set to heavily influence the outlook on future Fed rate hikes. As things stand, a July hike is all but priced in, though Fed Funds futures expect just about a one-in-three chance of an additional hike for the rest of the year.

New Zealand Dollar Pares Gains as RBNZ Holds Rates

There was no dramatic surprise from the RBNZ, which kept interest rates on hold at Wednesday’s meeting, as expected. The central bank has been aggressive, raising rates 12 straight times since August 2021 until Wednesday’s meeting. This leaves the cash rate at 5.50%.

Bitcoin is Gaining Momentum

Bitcoin is up 0.6% at $30.8K and is approaching the upper boundary of its short-term range at $31.4K. Only a break above this level will indicate that the market is ready for further gains, with potential targets near $35.5K by the end of the month.

NZD/USD – RBNZ May Be Done With Its Tightening Cycle After Pause

The RBNZ opted to pause its tightening cycle earlier today after a very aggressive tightening cycle over the last couple of years.

FTSE 100 – Tentatively Higher With an Eye on US Inflation Data

European stock markets are tentatively higher on Wednesday, with the FTSE 100 leading the way up more than 1%,  as traders adopt a cautious position ahead of the US inflation report.