The focus overnight was in New Zealand as the Reserve bank of New Zealand (RBNZ) cut interest rates for the third time in three months. They also signalled that another cut may be needed to boost inflation as growth slows. RBNZ governor stated that "At this stage , further easing in the OCR seems likely". Growth in the NZ economy is the weakest it has been in 3 years , inflation is set to remain below the 2% target and the slump in diary prices is hitting exporters hard. The Nzd dollar fell sharply after the decision and is likely to remain under pressure for the foreseeable future as traders price in further easing. Rates are now at 2.75% with many thinking that rates will be cut again at the next meeting which would completely erase last year's rate rises.
In Australia the August jobs data was slightly above consensus as total employment rose by 17.5k against an expectation of 6.3k pointing to a slowly improving labour market. The jobless rate also fell to 6.2% from 6.3%. The Australian dollar had been under a little pressure after the interest rate rise in NZ however the better than expected data helped arrest he decline. The improving data is welcome but with GDP growth at it's lowest in 4 years I'm sure the RBA will be watching carefully. Any signs of a further cooling and talks of rate cuts will certainly resurface and see the dollar weaken.
Today we await news form the UK as the Monetary Policy Committee vote on what to do with interest rates. Their will almost certainly be no change in policy however we get to see the result of the vote and the minutes immediately. Events in China may have taken their toll and the vote will probably remain at 8-1 to leave rates on hold however Governor Carney stressed last month that those factors alone may not be enough to derail the prospect of higher rates. Subsequently UK data has been disappointing and the situation in China has got worse. Whatever the result we will find out at midday today what the feeling is within the committee and sterling will be volatile around the decision.