RBNZ is to announce its interest rate tonight at 20:00 (GMT) and is expected to remain on hold at +1.75%. The market has priced in the probability to remain on hold at 99.88% and the financial data also support the case as the inflation is currently at +1.6%, below RBNZ’s target range of 2-3%. The focus should shift to the accompanying statement and specifically to the inflation rate which has recently dropped. Another point to keep a look out for would be the recent strengthening of the NZD. Overall, the statement could have a positive outlook, however, due to the factors mentioned above we see the case for a cautious comment about the future rate hike path. NZD could weaken as the statement could be on the dovish side.
- Support: 0.7250 (S1), 0.7180 (S2), 0.7110 (S3)
- Resistance: 0.7370 (R1), 0.7417 (R2), 0.7461 (R3)
German coalition partners: Painful Compromises
German parties have been negotiating hard and long in order to form a government coalition in the past few days. Merkel stated that all of the parties involved in the coalition negotiations will have to make painful compromises. SPD officials on the other side, seem to be confident that they are on the right track, however, work still needs to be done. We see the case for the partners to reach an agreement at any given moment until the end of the week and for the EUR to strengthen upon the announcement of the agreement.
- Support: 1.2355 (S1), 1.2230 (S2), 1.2100 (S3)
- Resistance: 1.2495 (R1), 1.2600 (R2), 1.2770 (R3)
Today’s other economic highlights:
Germany: Industrial output for December, Survey:-0.5%mom, Prior:+3.4%mom, 07:00(GMT), negative to EUR.
US: Crude Oil inventories, Survey:+2860M Prior:+6.776M, 15:30 (GMT), positive for WTI.
New Zealand: RBNZ Interest rate Decision, Survey:1.75%, Prior:1.75%, 20:00 (GMT), neutral to negative for NZD
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