Kiwi Posts on Forex Blog
Asian Forex News: New Zealand Disappoints, Japanese Inflation Hits Decade High
Jun 26, 2008
All signs point to a rate cut for the Kiwi.
New Zealand's trade deficit grew by $196 million in May. This was far worse than the expected rise of $150 million. Thats nearly a $250 million swing!
Merchandise exports were up 11.2% year over year. However, merchandise imports were up 17.3%.
This comes on the heels of yesterday's current account deficit, which was an alarming $13.8 billion, 7.8% of GDP.
Considering the strength of the Tui oilfield and dairy prices, this is indeed worrying news for the Kiwis.
To top that off, New Zealand Q1 GDP was finalized at 1.9%, slightly worse than the expected 2.1%.
And the gloomy news kept on coming out of Asia.
Japan reported a jump in inflation from 0.9% in April to 1.5% in May. This is the largest month over month increase in a decade. However, traders need to keep some perspective. Japan reintroduced a fuel tax in May, which may account for some of the rise.
Separately, Food prices rose 2.4%, Like many other countries, japan excludes food when calculating CPI.
Japan's household spending also fell -3.2% in May, larger than the expected reading of -2.2%.
On the plus side, japanese unemployment remained flat at 4%, as expected.
Relevant Forex prices At 11:30pm est
USDJPY 106.970 (-0.990, -0.92%)
AUDJPY 102.35 (-1.20, -1.16%)
EURJPY 168.28 (-0.97, -0.57%)
NZDUSD 0.7565 (-0.0008, -0.11%)
NZDAUD 1.2636 (-0.0020, -0.16%)
EURNZD 2.0786 (+0.0091, +0.44%)
inflation, GDP, CPI, JPY, NZD, Yen, Kiwi
Tidbits Under the Radar
Jun 6, 2008
I won't recap the events of today - just about every news outlet has reported the record rise in crude, the jump in unemployment, and 3% drop in US equities.
With those events dominating headlines, several nuggets of information may have slipped by.
1. German industrial production fell 0.8% in April and factory orders contracted for a 5th month.
2. The French April Trade Balance balance beat expectations, coming in at -€3.7 billion vs the expected €-4 billion reading.
3. The CAD and NZD moved weakly against the greenback The NZD can be explained by the RBNZ comments Thursday. The CAD weakness may indicate that forex traders anticipate a rate cut from the Bank of Canada. The interest rate currently stands at 2.75%, and may be cut 0.25% on Tuesday.
4. US wholesale petroleum inventories jumped 8.8% in April. Additionally, March inventories fell less than previously reported. The March drop of 5.6% was revised higher to 4.5%
5. The 6 member Gulf Cooperation Council will meet Monday to discuss technical issues related to the proposed monetary union in 2010. Oman has already indicated it will not join the union.
Loonie, CAD, NZD, oil, Kiwi
Kiwi Down Against 16 Majors, Rate Cuts this Fall
Jun 5, 2008
As expected, the RBNZ held rates steady at 8.25%. But,governor Bollard shocked forex traders today with an extremely dovish statement after their scheduled meeting. In his statement Bollard stated the RBNZ was "in a position to lower the OCR later this year". Indeed, New Zealand has been hit with their own slowdown recently. While house prices recently rose 2.7%, sales are down severely across the country. This has prompted the RBNZ to predict a 13% reduction in home values, 22% when inflation is factored in.
Bollard suggested that inflation will hit 4.7% in Q3, as such the bank is unlikely to cut until they see further deterioration. But in a nod to the realities of the slowdown, Bollard suggested GDP expansion would be extremely limited this year with only a modest recovery next year. This sharply contrasts with predictions made earlier this year for strong growth. Should weakness persist, the chances for a September rate cut will certainly pick up.
One shore over, Australia continues to see strong growth. GDP beat expectations by rising to 3.6% annualized - far higher than the 2.8% estimated. And, the trade deficit improved drastically, shrinking from AUS $2.55 billion to AUS $957 million in April. Indeed, with an expected growth of 20% in mining contract terms, and increases to iron ore still unaccounted for, the trade deficit may vanish entirely. Forex traders continue to speculate that Australia may raise rates once again in the next year.
September-October may be a wild period if the US and Australia raise rates while New Zealand cuts.
The Kiwi is down against all 16 majors. The NZDUSD is at 76.67, down more than 2% from yesterday.
GDP, NZD, rate cut, Kiwi, RBNZ
