FX wrap – RBNZ delivers a 25bps rate cut but NZD rallies. Further GBP weakness looking ever stretched. CAD and MXN on the front foot as oil price recovery sustained.
The RBNZ last night met with market expectations in delivering a 25 bps cut market, which now stands at 2%. Some analysts had predicted an outside 50 bps cut, which then resulted in NZD strength against major crosses; also of note, RBNZ governor Wheeler later mentioned that a 50bps cut was not considered, which also bolstered the NZD. Tonight retail sales are released, which will also give us an indication on the country’s economic outlook and are expected to reach 1% higher than the previous 0.80%.
In other commodity-related currencies USD/CAD has weakened today as WTI and Brent both traded positively. This came as the EIA kept this year's oil demand forecast at 1.4mln bpd. Also of note, the Saudi Oil Minister has stated that there is to be a meeting between OPEC and non-OPEC producers next month in order to discuss the market, which could include potential action in order to stabilize the market and in turn USD/CAD dropped back towards 1.30.
The EUR had a solid session against it counterparts, recording new monthly highs and targeting .8625 which is the high print seen on the 6th of July. From a technical perspective EUR/USD has reached the intraday 61.8 fib level after some significant afternoon strength.
Cable still resides below the pivotal 1.30 handle, and after testing the psychological level this morning produced clear rejection candles and continued to trade below.
Today we did also see GDP data from Russia, which beat the previous reading of -1.20% to print a reading of -0.60%, and alongside this the recent retracement oil prices have helped the RUB strengthen against the USD. Swedish CPI also beat expectations to send SEK to 9.40 vs the EUR and just under but still underperforming vs the NOK.