Intraday Market Thoughts

RBNZ Hikes, Kiwi Jumps, Aussie Jobs Next

by Adam Button
Mar 12, 2014 23:20

The RBNZ hiked rates and promised more hikes to come, sending the kiwi to the highest since October. The euro came within one pip of the highest levels of the year. The focus later shifts to Australia with the February employment report due.

RBNZ Governor Wheeler's attempt to talk down the New Zealand dollar after hiking rates failed. The 60 pip surge in NZD/USD after the decision is hardly surprising considering that Wheeler raised rates, touted the economy, warned about inflation and said 125 bps in hikes could come this year -- more than the 75 bps priced in. He said the exchange rate is a concern and that the current NZD level is not sustainable but actions speak louder than words.

Another currency that rallied Wednesday was the euro as it popped to 1.3914, just shy of the 2014 high set on Friday. Dollar weakness was one catalyst but the ECB's Coeure also didn't have the same urgency in his warnings about deflation and the ECB's willingness to act. He had been one of the most vocal doves and unless inflation data rapidly turns, a rate cut or other action is less likely.

Concerns about China and Ukraine remain at the forefront and gave gold the push it needed to break above the October highs to $1370. Stock markets remain blasé and the S&P 500 shook off an early 14 point decline to finish unchanged.

The Australian dollar finally found a footing at 0.8924 after retracing nearly all of last week's gains. AUD/USD finished just below 0.9000 but the day ahead promises to be volatile with the employment report on the docket at 0030 GMT. The consensus is 15K with unemployment unchanged at 6.0% but economists have overestimated jobs growth in 6 of the past 7 reports.

Today's Premium Insights issued 2 new longs on NZDUSD, of which is in progress. USDJPY, AUDUSD, AUDNZD and AUDCAD await tonight's Aussie jobs report, while EURUSD long awaits the final target at 1.3930. All trades are in the latest Premium Insights.
Act Exp Prev GMT
Employment Change s.a. (FEB)
18,000 -3,700 Mar 13 0:30
Fulltime employment (FEB)
-7,100 Mar 13 0:30
Part-time employment (FEB)
3,400 Mar 13 0:30
Unemployment Rate s.a. (FEB)
6% 6% Mar 13 0:30

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