RBNZ stays on hold, Bitcoin approaches $13k


  • RBNZ left rates unchanged but signalled a possible need to act in the future
  • China suspends meat imports from Canada after finding false export certificates
  • Bitcoin smashes $12k and approaches another round barrier

Walking a tightrope

After cutting interest rates earlier this year the Reserve Bank of New Zealand chose to leave them unchanged at today’s meeting offering a statement suggesting that some rate cuts could be needed though. The RBNZ kept its main OCR at 1.5% as broadly expected, however, the statement and minutes offered some dovish stuff. The most important line seems to be that signalling that a lower OCR may be needed over time to continue to meet RBNZ’s objectives. This phrase was included at the beginning and the end of minutes releases right after the meeting. On top of that, the NZ central bank admitted that downside risks related to trade activity had intensified, hence the global economic outlook became blurrier. Among reasons standing behind possible OCR cuts in the future one may also find subdued domestic growth in New Zealand and inflation remaining still slightly below the midpoint target. In addition to that, some RBNZ members noted that lower commodity prices and upward pressure on the New Zealand dollar could exert downward pressure on imported inflation. In terms of recent house price falls the RBNZ said that they were likely to dampen household spending if sustained. Overall, market observers read these materials as slightly dovish, however, they had perceived the RBNZ stance in such a way prior to the meeting in June. After the decision the market-based probability of a rate cut in August increased several percentage points and it currently stands just under 80%. On the other hand, one may suppose that market participants were prepared for even more dovish remarks from the RBNZ as the NZ dollar gained against the USD following the decision. In early European trading the NZD is leading the gains being 0.2% up against the greenback.

The NZDUSD continues its bullish march after testing 0.65. The major resistance can be found nearby 0.6680. Right now it looks like the NZD has a better outlook ahead compared to the Aussie, at least from an investors’ point of view. Source: xStation5

China suspends meat imports from Canada

China informed yesterday that starting on Wednesday it would suspend all meat imports from Canada after finding a number of false veterinary health certificates for those products. The Canadian Agriculture Ministry said that it was investigating this issue informing appropriate law enforcement agencies. It also confirmed that export certificates to other countries were not affected. It needs to be noticed that the decision taken by Beijing has come during a critical time for China as it has become more dependent on imported pork on the back of African swine fever. Between January and April this year China has imported Canadian pork worth 310 million CAD, it means that China has been Canada’s third-largest export market by then. The Canadian dollar has not been particularly affected so far and it is trading only subtly lower against the US dollar this morning. 

The USDCAD keeps moving down after failing to come back into the bullish channel. The first more important support could be found nearby 1.31. Source: xStation5

In the other news:

  • Bitcoin rises almost 10% this morning, it means that it has already topped $12k and approached $13k in recent hours

  • Oil prices rise around 2% this morning after the API report pointed to a more than 7 million barrels decrease in inventories in the US last week

  • Bloomberg reports that the US is reportedly willing to suspend another round of tariffs on $300 billion of Chinese goods, a decision could be announced after a Trump-Xi meeting on Saturday during the G20 summit

Daily summary: Inflation spooks US equities
Wendy’s stock jumped on upbeat earnings, yet pared all gains
US crude inventories fell just slightly - EIA data shows
Ichimoku patterns : NIKKEI (JAP225)
BREAKING: US CPI inflation soars 4.2% YoY in April
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