NZD gains strength from record rate hike
The Reserve Bank of New Zealand delivered a record-breaking 75 basis point interest rate hike when they met in the early hours of this morning. That brought the base rate up to 4.25%; the highest since December 2008. They also increased their forecast for the peak of this rate hiking cycle to 5.5% and warned that New Zealand could face a year of recession before inflation subsides to a more manageable level. The current consumer price inflation rate is 7.2%; the highest it has been since 1990. The immediate market reaction was to buy the NZD for the improvement in yield and that brought the GBPNZD rate down a cent to NZD 1.9250, which is where it sits this morning. The next event for the NZD is retail sales data late on Thursday and the next UK data comes this morning in the form of producer price inflation. So there is room for more activity on this pair before the week is over.
USD flattens out ahead of Fed Minutes
Although the US dollar is a little weaker this morning, it appears to have flattened out ahead of this evening’s release of the minutes from the last US Federal Reserve meeting. Traders and investors will be hoping there are some hints within the Open Market Committee’s discussion that will foretell of monetary policy to come. They must be used to being disappointed by previous meeting notes, which most often only tell us what we already knew. Maybe simple reinforcement of existing beliefs will be enough to shift the USD. Right now, the GBPUSD rate is back up to $1.19, where it has failed to carry on three times in the past two days, and the EURUSD rate is back up to Friday’s levels around $1.0350. As it is Thanksgiving Day in America tomorrow, we will get the early release of the weekly jobless claims numbers today, alongside some housing market data and the University of Michigan consumer sentiment indices. so there is plenty to keep the markets busy ahead of the Fed minutes being released.
Directionless GBP awaits PMIs and BOE comments
The great British pound looks a little rudderless this morning. traders are awaiting the release of a full suite of purchasing manager’s indices from the UK; the forecasts of which look a little depressing. We will also hear from at least three Bank of England members during the day. There may well be reasons for the pound to shift its position but it is likely that US data will dominate the GBPUSD rate, which starts the day around $1.19, and the GBPEUR rate will also be influenced by PMIs from the Eurozone. Having failed to break above €1.16 yesterday, the GBPEUR rate starts the day at €1.1505.