Talking Points:
- NZ Dollar Slumps as Markets Bet on Most Dovish RBNZ Outlook Since 2009
- Aussie Dollar Fails to Hold Gains After Comments from RBA DepGov Lowe
- US Dollar Corrects Higher After Dropping the Most in a Month Last Week
The New Zealand dollar underperformed in overnight trade amid deteriorating RBNZ policy expectations. Priced-in bets reveal investors are leaning toward two 25 basis point rate cuts over the coming 12 months, making for the most dovish outlook since 2009.
The Australian dollar saw a bit of a boost following remarks from RBA Deputy Governor Lowe, who hinted the central bank probably won’t cut the cash rate further in the near term.Gains proved short-lived however considering the message echoed the tone of the RBA’s latest policy statement, which have had ample time to be priced already.
The US dollar launched a broad-based recovery, scoring gains against nearly all of the majors in a move that appeared corrective after the benchmark unit lost 1.04 percent last week, the most in a month. From here, the greenback will look to minutes from April’s FOMC meeting and April’s US CPI data (both due later this week) for direction cues.
