{"id":147107,"date":"2019-05-06T09:30:10","date_gmt":"2019-05-06T13:30:10","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=147107"},"modified":"2019-05-06T08:34:24","modified_gmt":"2019-05-06T12:34:24","slug":"weekly-market-outlook-focus-on-rba-and-rbnz","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2019\/05\/weekly-market-outlook-focus-on-rba-and-rbnz\/","title":{"rendered":"Weekly Market Outlook: Focus On RBA And RBNZ"},"content":{"rendered":"
May 6, 2019<\/div>
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By <\/strong>Orbex<\/strong><\/a><\/p>\n

The week ahead will be somewhat slower with most of the attention turning to the Asia Pacific region.\u00a0On the cards, the Reserve Bank of Australia and the Reserve Bank of New Zealand will be holding their respective monetary policy meetings this week.<\/strong><\/p>\n

The RBNZ is forecast to maintain a steady ship, while the RBA is forecast to cut rates.<\/p>\n

On the economy front,\u00a0data from the UK will cover the GDP figures alongside manufacturing and industrial production numbers<\/strong>. Both industrial and manufacturing output could rise at a slower pace after rising sharply in the previous period.<\/p>\n

The Canadian labor market report will be due on Friday. Recent economic data saw the economy cooling but growth in the labor market remains strong so far.\u00a0The unemployment report is forecast to maintain a steady trend.<\/strong><\/p>\n

Fed Chair, Jerome Powell will be speaking this week at an event<\/strong>. Powell\u2019s speech will be one to watch as investors look for clues into the central bank\u2019s forward guidance. Following last week\u2019s decision to leave rates steady with neutral forward guidance, Powell\u2019s speech could be crucial for the USD this week.<\/p>

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Here\u2019s a quick recap of what\u2019s to come in the currency markets this week.<\/p>\n

RBNZ Expected to Keep Rates on Hold<\/strong><\/h2>\n

The Reserve Bank of New Zealand will be holding its monetary policy meeting on early Wednesday.\u00a0Economists forecast that the RBNZ will be leaving the overnight cash rate unchanged at 1.75%.<\/strong>\u00a0This would mark another monetary policy meeting where the central bank will be sitting on its hands.<\/p>\n

Economic data from New Zealand continues to remain bleak which raises the prospects of a surprise decision from the central bank.<\/strong>\u00a0GDP growth in New Zealand remains weak, falling short of the RBNZ\u2019s expectations.<\/p>\n

Inflation also remains stubbornly below the central bank\u2019s 2% inflation target rate.<\/strong>\u00a0The prospect rises for a rate cut amid the RBNZ\u2019s previous forward guidance.<\/p>\n

In March, the central bank gave a more easing bias.\u00a0In its previous statement, the RBNZ signaled that the prospects of a rate cut are much higher than a rate hike<\/strong>. Even if the RNBZ does not cut rates, there is a strong chance that its forward guidance will be a lot more dovish than previous meetings.<\/p>\n

Reserve Bank of Australia to Cut Rates<\/strong><\/h2>\n

Investors will be closely watching the RBA\u2019s monetary policy meeting this week. Heading into the event, the markets expect the RBA to lower rates by 25 basis points.\u00a0<\/strong>This would bring interest rates in Australia to 1.25%.<\/p>\n

The changes to the RBA\u2019s interest rate come nearly two years since the RBA kept rates steady at 1.50%.\u00a0<\/strong>The central bank has been steadily lowering interest rates since 2008.<\/p>\n

The prospects of a rate cut grew louder as the inflation data for the first quarter fell sharply.\u00a0Australia\u2019s trimmed mean CPI was seen at 1.6% on the year ending in the March quarter.<\/strong>\u00a0It remains well below the 2% \u2013 3% inflation target band.\u00a0At the moment, the markets are pricing in a change of a 45% probability for a rate cut.\u00a0<\/strong>The Australian dollar was already declining in anticipation of the rate cut from the central bank this week.<\/p>\n

US Inflation and Trade Balance Data in Focus<\/strong><\/h2>\n

This week will be somewhat slower from the US. Economic data is expected to cover inflation and trade balance figures.\u00a0Expectations are for the trade balance figures to deteriorate somewhat slightly. <\/strong>However, this won\u2019t have much impact given that trade balance figures have been improving significantly.<\/p>\n

US inflation data is due out later this week.\u00a0Headline inflation is expected to rise by 0.4% on the month in April.<\/strong>\u00a0This marks a steady pace from the month before.\u00a0The core inflation rate is forecast to rise 0.2%, up from 0.1% in March.<\/strong><\/p>\n

The increase in inflation comes amid\u00a0higher oil prices<\/a>\u00a0which could give a boost to consumer prices.\u00a0<\/strong>Meanwhile, the increase in core inflation comes on speculation of higher transportation costs and stronger\u00a0housing market data<\/a>.<\/p>\n

By <\/strong>Orbex<\/strong><\/a><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By Orbex The week ahead will be somewhat slower with most of the attention turning to the Asia Pacific region.\u00a0On the cards, the Reserve Bank of Australia and the Reserve Bank of New Zealand will be holding their respective monetary policy meetings this week. The RBNZ is forecast to maintain a steady ship, while the […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-147107","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/147107","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=147107"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/147107\/revisions"}],"predecessor-version":[{"id":147117,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/147107\/revisions\/147117"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=147107"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=147107"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=147107"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}