Good opportunity to focus on the AUDNZD market change
Independent Analyst: Zhen Quanxi
1: New Zealand
Last week, the New Zealand central bank unexpectedly cut interest rates by 50 basis points, causing NZDUSD to drop sharply by nearly 180 points to 0.6378. The decline was only about 30 points lower than the lowest point in January 2016. After the panic situation subsided, the exchange rate Following the rebound and closing at 0.6462, the overall situation showed a sharp decline for three consecutive weeks.
Let's take a look at Mr. Hawkesby said to comfort the market, who is assistant governor of Reserve bank of New Zealand.
Pay close attention to inflation expectations, confident that inflation will rise after cut interest rates by 50 basis points, if inflation falls rapidly, non-traditional policies will serve as an emergency tool, and a 50 basis point cut will reduce the possibility of using non-traditional policy.
First of all, we must fully utilize the traditional policy, and the interest rate outlook will be more balanced after cutting interest rates by 50 basis points.
There may still be a need to lower the official cash rate (OCR), and the global economic environment and domestic corporate confidence are the main downside risks to the interest rate outlook.
It is expected that the exchange rate will be lowered by a larger interest rate cut. The main forecast is that no negative interest rate is needed, but it is open to negative interest rates. The assistant governor clearly stated to the market: The New Zealand Federal Reserve has no bottom line. The tricks to save the economy will still be out, and the currency will be devalued until the inflation is expected.
Market Analysis if the employment data released on Thursday is ideal, it will support the Reserve Bank of Australia's September meeting on interest rates will no longer cut interest rates and maintain the status quo.
Let's take a look at Merrill Lynch evaluates the Australian Federal Reserve. It is expected that the Reserve Bank of Australia will remain inactive in September and consider other alternative options. The Reserve Bank of Australia is expected to cut interest rates further in November and cut interest rates again in the first quarter of 2020 to bring the OCR to 0.5% to consolidate its economic growth prospects.
However, if the labor market data is weak and the global economy deteriorates, the Reserve Bank of Australia may also cut interest rates in September.
The employment data released by Australia on Thursday will determine the direction of the Australian dollar. After two comparisons, it is not difficult to find:
1: If the data is good for the Australian dollar, it will instantly expand the exchange rate gap with the New Zealand dollar.
2: Similarly, if the data is not ideal, it will immediately repair the huge gap caused by the New Zealand dollar interest rate cut last week.
So, is the employment data good or bad?
Tell everyone that except for the Reserve Bank of Australia (except for leaks, which happened before and vowed to take out the deep throat, but then it will not become the laughing stock of the world) only "God" knows!
All the information mentioned above only represents the view of corresponding Mentari. The information, opinions and analysis contained herein are based on sources believed to be reliable but no representation, expressed or implied, is made as to its accuracy, completeness or correctness. PT Mentari Mulia Berjangka is not responsible for the content of any analysis, advice, comment, suggestion, research report or market data in this article and link to third-party resources.