The RBNZ joined the fray today, livening up the NZD/USD market that was going for a shock cut from the central bank who has never been afraid to go against the general consensus in the past.
The Kiwi immediately rose pretty high, as the market was forced to recalculate its expectations. Markets, like Chinese traders, love a punt too!
The bank is worried about the house price boom in the major cities… well Auckland, stoking inflation. Certainly a different narrative to elsewhere!
With this issue now being communicated, Forex markets will start to price out and near term rate cuts from the RBNZ and the higher NZD/USD could open up a whole new range of problems for Wheeler. This one will be interesting.
In yesterday’s Wednesday Wrap, we spoke about how EUR/USD may interpret Draghi’s stimulus program being kicked off this week. The ECB’s corporate bond buying program kicked off with a bang, pushing yields to twelve month lows as the bank soaked up liquidity.
As you can see above, EUR/USD has been coiling on the hourly, into a longer term resistance zone that if you’ve followed this blog before, will be on your chart. Markets just aren’t sure how to interpret Draghi’s stimulus where a central bank tries to act as a private bank.
For now the technicals are holding but the lack of moves highlight the uncertainty around the program.
What’re you watching or trading this relatively quiet week on the Forex calendar? Let us know with a comment over on social media!
CNY Bank Holiday
EUR ECB President Draghi Speaks
USD Unemployment Claims
CAD BOC Gov Poloz Speaks
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This is a guest post originally appeared on Vantage FX blog. Resposted with permission.