RBNZ Pushes Back Rate Hike Timeline

Daily Analysis - 09/08/2018

Kiwi Dollar Tumbles to 28-Month Low

The New Zealand Dollar slipped as much as 1.10% against its US peer during the Asian session to touch its lowest point in over 28 months after the Central Bank delayed its timetable for increasing interest rates. As was widely anticipated, the Reserve Bank of New Zealand kept the Official Cash Rate on hold at a record-low of 1.75%. However, Governor Adrian Orr surprised investors by announcing that the Bank expected to keep the benchmark rate “at this level through 2019 and in to 2020,” which was longer than his forecast announced during the May Statement.

Pound Skids to 10-Month Trough Versus Euro On No-Deal Fear

The British Pound fell to its lowest level since October against the Euro as investors continue to fret that the UK might end up leaving the European Union with no concrete agreement for future economic ties in place. Europe’s common currency breached the key psychologically level of GBP 0.9000 earlier on Wednesday, rallying to as high as GBP 0.9018 amid a bout of aggressive buying. Investors have turned increasingly bearish on Sterling as the Brexit deadline of March 2019 approaches. The latest figures from the US Commodity Futures Trading Commission suggests that both asset managers and leveraged funds are adding to their short positions.

Fresh US Sanctions Hammer Russian Ruble to 21-Month Low

The Russian Ruble slumped to its lowest since late 2016 on Thursday as the United States slapped new sanctions on the country. The US State Department announced on Wednesday that Washington will impose more sanctions on Moscow under a biological warfare law following the poisoning of a former Russian spy Sergei Skripal and his daughter in the UK earlier this year. The fresh sanctions are expected to take effect from August 22^nd onward. The intermittent flare-up in US – Russia relations has seen the Ruble shed 13.50% against the Dollar in 2018.

Weak Dollar Keeps Gold Steady

Gold prices are clinging on to small gains in early Thursday trade, boosted by weakness in the US Dollar against the Japanese Yen. The Yen rose to a two-week high against the greenback ahead of trade talks between the United States and Japan, with market attention focussed on how the tariffs on automobiles are discussed. A weaker Dollar makes greenback-denominated gold less expensive for buyers in other currencies, increasing demand for the metal. Spot gold was up 0.10% at $1,214.50 per troy ounce, having gained 0.20% in the previous trading session. Holdings in SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, decreased 0.18% to 786.08 tonnes on Wednesday from 787.53 tonnes on Tuesday.