Rate Surprise from New Zealand

The Reserve Bank of New Zealand made another rate hike of 50 points to 5.25%. Contrary to forecasts of a 25-point rate hike and the global trend towards a slowdown in policy tightening, the RBNZ has not slowed down a step. In this cycle, the rate has already been increased by 500 points.

New Zealand Dollar Surges But Unable to Consolidate after RBNZ Hkes by 50 Basis Points

The New Zealand dollar is showing sharp movement on Wednesday after the Reserve Bank of New Zealand shocked the markets and raised rates by 50 basis points. In the US, JOLTS Jobs Openings was below expectations, raising concerns about the strength of the US labour market.

USD/CAD – Canadian Dollar Eyes Canada's Job Report

Canada’s employment report usually coincides with the US employment report on a Friday. A quirk in the calendar has Canadian markets closed for a holiday on Friday, so Canada’s employment data will be released on Thursday, a day ahead of the US numbers. The economy is expected to have created 12,000 new jobs in March, down from 21,800 in February, while unemployment is projected to inch higher to 5.1%, up from 5.0%.

AUD/USD – Aussie Falls as Inflation Dips

The Australian dollar is trading at 0.6670 in Europe, down 0.57%. Australian inflation was lower than expected, raising speculation that the Reserve Bank of Australia might pause at its April meeting.

USD/CHF – Swiss Franc Steady after Economic Expectations Slide

The Swiss franc has edged higher on Wednesday. USD/CHF is trading at 0.9176 in the European session, down 0.23%. The ZEW Economic Expectations index fell sharply to -43.3 points. In the US, CB Consumer Confidence improved to 1o4.2 points.

German Consumer Climate Continues to Recover

The GfK consumer climate index for Germany rose by 1.1 points to -29.5 in April, a very low level by historical standards and still below the lows of the pandemic in the year 2020. Sentiment has been improving since October, allowing talk of a recovery from the inflation and energy shock in Europe’s largest economy, although the pace of recovery has slowed.

An Upside Inflation Surprise Could Not Come at a Better Time for Yen Bulls

With the rest of the world almost reliving the 2007-08 events, the Japanese developments were mostly under the market radar. This is not atypical, but as we get closer to the Bank of Japan governorship handout the market will start to pay attention to Japanese news. Yen bulls have been enjoying the recent moves, but for the next leg they need concrete economic evidence. Hence, all eyes may be on Friday’s busy calendar with the Tokyo inflation figures being the highlight release.

Sunset Market Commentary

The Bank of England published the summary and record of its quarterly Financial Policy Committee meeting (March). The FPC closely monitored the problems facing SVB, Credit Suisse and judges that the UK banking system remains resilient (well-capitalized, large liquid asset buffers).

New Zealand Dollar Runs Out of Steam, Business Confidence Next

The New Zealand dollar is lower on Wednesday. NZD/USD is trading at 0.6236 in the North American session, down 0.28%. In the US, Pending Home Sales slowed but were better than expected. Later in the day, New Zealand releases ANZ Business Confidence.

RBA Board to Pause Next Week

The Reserve Bank Board meets next week on April 4. We confirm the forecast we released on March 17 that the Board will decide to pause at the April meeting.