RBNZ kept it’s interest rate stable at 1.75% as was widely expected by the market. The statement had a dovish tone. Monetary policy is to remain accommodating for a considerable time and inflation rate to reach 2% in 2020. Also, it was commented that the NZD rise was largely due to US Dollar move. Later on, RBNZ Governor stated that he is quite comfortable with current NZD position and not concerned about it. Overall, we see the case for the outlook to weaken the NZD, as possible future rate hikes have been “pushed” further into the future.
- Support: 0.7180(S1), 0.7417(S2), 0.7035(S3)
- Resistance: 0.7250(R1), 0.7370(R2), 0.7414(R3)
All eyes on the BoE
BoE is widely expected to remain on hold, keeping interest rates at +0.50%. The market has priced in the scenario with a probability of 98.58% (GBPOIS). The bank may want to retain flexibility ahead of the Brexit negotiations uncertainty, regarding the future rate hike path and hence avoid committing to any further rate hikes. We also see the case for forecasts of stronger growth and maybe lower inflation rates with a horizon of two years We expect the overall effect of the voting, inflation report and inflation letter to be supportive to the GBP.
- Support: 1.3875(S1), 1.3749(S2), 1.3590(S3)
- Resistance: 1.4040(R1), 1.4168(R2), 1.4325(R3)
Today’s other economic highlights:
Germany: Trade Balance for December, Survey:20.4B, Prior:22.3B, 07:00(GMT), negative to EUR.
Eurozone: ECB Economic Bulletin, 09:00 (GMT), positive for the EUR
UK: BoE Interest rate Decision, Survey:+0.50%, Prior:+0.50%, 12:00 (GMT), positive to GBP
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