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6 May 2015
NZD/USD: shift in bias by RBNZ lifting volatility – BTMU
FXStreet (Barcelona) - Derek Halpenny, European Head of GMR at Bank of Tokyo-Mitsubishi UFJ, views the weaker than expected employment data and the shift in bias by RBNZ is fuelling volatility in NZD/USD.
Key Quotes
“The shift in bias by the RBNZ is certainly playing a key role in lifting volatility in NZD/USD. NZD/USD dropped close to 1.0% today on the back of the employment data, which was weaker than expected.”
“While the data was disappointing it was by no means disastrous and the reaction does highlight the fact that large speculative positions have been in place, perhaps more against the Australian dollar than the US dollar given the monetary divergence was perceived clearer versus RBA expectations than versus Fed expectations.”
“The unemployment rate remaining unchanged at 5.8% rather than declining to 5.5% as expected was one surprise in the data but the 0.2% hourly earnings gain at a time when the RBNZ is expressing concern over low inflation becoming entrenched in wage and price setting behaviour was the key data that triggered the reaction in the market. The 0.2% gain in Q1 earnings was the weakest since the 0.4% drop recorded in Q4 2012.”
“With the RBNZ wishing to see NZD depreciation, weak earnings data would provide the central bank with the perfect justification to act to ensure NZD weakness is maintained.”
Key Quotes
“The shift in bias by the RBNZ is certainly playing a key role in lifting volatility in NZD/USD. NZD/USD dropped close to 1.0% today on the back of the employment data, which was weaker than expected.”
“While the data was disappointing it was by no means disastrous and the reaction does highlight the fact that large speculative positions have been in place, perhaps more against the Australian dollar than the US dollar given the monetary divergence was perceived clearer versus RBA expectations than versus Fed expectations.”
“The unemployment rate remaining unchanged at 5.8% rather than declining to 5.5% as expected was one surprise in the data but the 0.2% hourly earnings gain at a time when the RBNZ is expressing concern over low inflation becoming entrenched in wage and price setting behaviour was the key data that triggered the reaction in the market. The 0.2% gain in Q1 earnings was the weakest since the 0.4% drop recorded in Q4 2012.”
“With the RBNZ wishing to see NZD depreciation, weak earnings data would provide the central bank with the perfect justification to act to ensure NZD weakness is maintained.”