Pakistan Affairs

Tag: kiwi

  • Dollar, sterling underpinned by upbeat PMI surveys; kiwi jumps

    SINGAPORE: The dollar and sterling were buoyant on Wednesday, after a surprise rebound in business activity in the United States and the UK raised the likelihood that their respective central banks would have further to go in raising interest rates.

    Elsewhere, the kiwi surged after the Reserve Bank of New Zealand (RBNZ) on Wednesday raised rates by an expected 50 basis points, but reiterated that inflation remains too high and employment is beyond its maximum sustainable level.

    Data released on Tuesday showed that US business activity unexpectedly rebounded in February to reach its highest level in eight months, while the UK flash composite Purchasing Managers’ Index (PMI) similarly surged to 53.0 this month, above the 50 threshold for growth for the first time since July.

    Dollar rally loses steam as traders wait on Fed, data

    The dollar rose against most major currencies after the upbeat data save for sterling, which jumped 0.6% on Tuesday. It was last 0.05% lower at $1.2107.

    In the euro zone, its flash composite PMI likewise climbed to a nine-month high of 52.3 in February, supported by surprisingly strong services growth.

    The euro, however, failed to benefit from the data as it slid 0.36% in the previous session. It was last 0.04% higher at $1.0652.

    “It was kind of an issue of relativities in a sense, that while the services sectors performed better across the board, that extra lift that sterling got, was because of that very, very strong performance,” said Rodrigo Catril, senior currency strategist at National Australia Bank.

    “I think the euro is still in a sort of more difficult situation, given that there’s a general sense that the ECB still has more work to do, and that puts a little bit of strain in terms of their growth outlook.”

    Against the Japanese yen, the dollar rose to a two-month high of 135.23 in the previous session, and slipped marginally to 134.91 in early Asia trade on Wednesday.

    The US dollar index stood at 104.13, having gained 0.3% on Tuesday.

    The rebound in US business activity comes on the back of a recent slew of resilient economic data pointing to a still-tight labour market, sticky inflation and robust retail sales in the world’s largest economy.

    Markets have since raised their expectations of how high the Federal Reserve would need to lift rates to tame inflation, sending US Treasury yields surging.

    The two-year yields jumped to an over three-month high of 4.738% in the previous session, and last stood at 4.6933%.

    The benchmark 10-year note yields peaked at 3.9660% in early Asia trade on Wednesday, its highest since last November.

    In other currencies, the Aussie slid after data showed that Australian wages grew at the fastest annual pace in a decade last quarter, but was still short of market forecasts.

    The Australian dollar fell about 0.3% after the data, and was last 0.1% lower at $0.6849.

    The kiwi rose 0.39% to $0.6238, after earlier jumping roughly 0.5% to an intra-day high of $0.6248 immediately after the RBNZ’s cash rate decision.



    Source link

    Join our Facebook page
    https://www.facebook.com/groups/www.pakistanaffairs.pk

  • NZ central bank hikes by 50bps, flags more to come as inflation ‘too high’; kiwi jumps

    WELLINGTON: New Zealand’s central bank raised interest rates by 50 basis points to a more than 14-year high of 4.75% on Wednesday, and said it expects to keep tightening further as inflation remains too high, a hawkish signal that sent the local dollar surging.

    The Reserve Bank of New Zealand (RBNZ) said it was too early to assess the policy implications of the recent devastating cyclone and floods in the country’s North Island, and expects to look past the short-term price pressures stemming from the weather events.

    The RBNZ continues to expect the cash rate to peak at 5.5% in 2023, according to the monetary policy statement (MPS) accompanying the rate decision.

    “While there are early signs of price pressure easing, core consumer price inflation remains too high, employment is still beyond its maximum sustainable level, and near-term inflation expectations remain elevated,” the central bank said in a statement.

    The decision was largely in line with a Reuters poll, in which 20 of the 25 economists forecast a 50-basis-point rate hike.

    The New Zealand dollar rose as high as $0.6246 after the decision, reflecting the hawkish tone of the statement, having traded as low as $0.6206 earlier.

    “There was some speculation that the RBNZ would keep the OCR on hold for the time being,” ASB Chief Economist Nick Tuffley said in a note to clients.

    “But the impacts of weather disasters will only make the RBNZ’s job of curbing inflation more challenging,” he said.. ASB expects another 50-basis-point rate increase in April, and Tuffley noted there was some risk the RBNZ will do more over time.

    Weather conundrum

    Flash floods hit New Zealand’s largest city of Auckland in late January and two weeks later Cyclone Gabrielle caused havoc across much of the North Islands. The two events left 15 people dead and have caused billions of dollars of damage.

    While the rebuild will boost the economy and inflation – already an issue for the central bank – growth is set to slow in the short term as damage to crops and infrastructure hurt food exports and makes movement around the North Island challenging.

    “The Committee acknowledged the significant regional impacts that the severe weather events will have across New Zealand, and agreed that the government’s fiscal policy response would be more effective at addressing these, rather than any monetary policy activity,” the central bank said.

    The RBNZ continues to expects New Zealand to slip into a recession in the second quarter of this year, but sees growth rebounding in the first quarter of 2024, earlier than its previous forecast.

    “Given the likely medium-term inflation impacts of the cyclone, we see the risks around our forecast 5.25% OCR peak as now tilted to the upside,” ANZ bank economist said in a note.

    “However, like the RBNZ, we’re in wait-and-see mode until the picture becomes clearer.”



    Source link

    Join our Facebook page
    https://www.facebook.com/groups/www.pakistanaffairs.pk