The Reserve Bank of New Zealand became the first major central bank to signal an end to rate hikes after it raised its official rate of 5.50%, sending the New Zealand Dollar strongly lower.
- The RBNZ hiked its official rate by 0.25% to 5.50% as expected, to the highest rate offered by any major central bank. However, the Bank surprised by making it clear this would be the final rate hike of the current tightening cycle, confirming 5.50% as a terminal rate. Governor Orr said that the latest inflation data was “satisfactory”. Markets responded by strongly selling the New Zealand Dollar.
- Stock markets began yesterday bullish until it became apparent that the impasse over the US debt ceiling was not close to resolution, which sent stock markets firmly lower, although there has been some recovery in recent hours. Yesterday did initially see the NASDAQ 100 Index reach a new 18-month high price. Trend traders might still find being long of several equity indices attractive right now.
- In the Forex market, the US Dollar is selling off weakly, in line with its long-term trend, after rising yesterday. Action has been dominated so far today by weakness in the New Zealand Dollar and strength in the British Pound. Trend traders will probably be looking for long trades in the USD/JPY and GBP/USD currency pairs, with the former reaching a new 5-month high last week.
- There will be a release of UK CPI (inflation) data, which is expected to show that annualized inflation is falling very strongly, from 10.1% to 8.2%.
- The FOMC Minutes of its moat recent meeting will be released later today.
- Some soft commodities have been breaking to new highs and trending strongly, notably the Cocoa ETF NIB, which rose very strongly Friday to close at a new 5-year high.