Softer Kiwi after New Zealand Rate Cut

August 11, 2016

The dollar advanced 0.4% against the New Zealand dollar, 0.3% versus the euro, yen and sterling, and 0.1% relative to the Swiss franc, Aussie dollar and yuan.  The greenback is 0.1% lower against the loonie.

New Zealand’s official cash rate was sliced 25 basis points to a record low of 2.0%. The drop had been expected by most analysts, although a few thought it might have been lowered more sharply. See review.

Bangko Sentral ng Pilipinas left the interest rate structure unchanged in the Philippines as expected. The overnight repo is 3.0%.  The reverse repo is 3.5%, and the deposit rate is 2.5%. Reserve requirements are unchanged, too.

Officials at the Bank of Korea retained a record low 1.25% seven-day repo rate. Such had been reduced by 25 basis points at June’s monthly policy meeting.

Share prices are mostly higher in Europe, with gains so far of 0.7% in France, 0.6% in Germany and Greece, 0.9% in Switzerland, and 0.3% in Italy and Spain. But the British Ftse is down 0.3%. Earlier in the Pacific Rim, stocks closed up 0.9% in Hong Kong but down 0.8% in Taiwan, 0.6% in Australia, 0.5% in China and 0.2% in Japan and Singapore.

There’s been little movement in commodities.  Gold and oil are off 0.1% at $1,350.80 per ounce and $41.66 per barrel. Oil had dropped initially in the wake of yesterday’s OPEC production report.

Ten-year German bund and Japanese JGB yields are each unchanged at negative 0.11%. The 10-year British gilt yield edged up a basis point but remains close to record lows.

More evidence of the damage wrought by the Brexit referendum on the U.K. economy was reflected in the house price balance index compiled by the Royal Institute of Chartered Surveyors, which dropped to a reading of 5% in July from 15% in June, 19% in May and 41% in April.

Italian consumer prices posted a 0.1% dip in the twelve months through July.

French consumer prices rose 0.2% in the same span. Core inflation was 0.4%.

Swedish total and core CPI inflation in July clocked in at +1.1% and 1.4%.

GDP in Singapore rose 0.3% on quarter and 2.1% on year in 2Q.

Irish industrial output was 0.4% lower than a year earlier in June. Romanian industrial output slipped 0.5% in the same period.

Turkey recorded a $4.942 billion current account deficit in June, up from $3.17 billion in the prior month and $3.21 billion a year earlier.

South African factory output increased 0.7% on month and 4.3% on year in June.

U.S. import price data and weekly jobless insurance claims get reported today.

Copyright 2016, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.


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