{"id":19840,"date":"2011-02-28T08:15:59","date_gmt":"2011-02-28T13:15:59","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=19840"},"modified":"2011-02-28T08:15:59","modified_gmt":"2011-02-28T13:15:59","slug":"forex-daily-market-commentary-rbnz-to-cut-the-ocr-by-50bp","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/02\/28\/forex-daily-market-commentary-rbnz-to-cut-the-ocr-by-50bp\/","title":{"rendered":"Forex Daily Market Commentary: RBNZ to cut the OCR by 50bp"},"content":{"rendered":"

By GCI Forex Research<\/strong><\/p>\n

Fundamental Outlook at \t\t\t0800 GMT (EDT + 0400)<\/strong><\/p>\n

USD<\/em><\/strong><\/p>\n

FX price action showed little conviction during the Asia session, an understandable reaction to the general lack of news flow. EURUSD traded 1.3712-1.3767 and USDJPY traded 81.62-81.76. Our team of analysts now expects the RBNZ to cut the OCR by 50bp at the upcoming policy meeting, in response to last week\u2019s tragic earthquake. Brent crude pushed even higher on supply concerns, and is trading at $113.88\/bbl at the time of writing; gold is hovering at $1413.95\/oz.
\nFed Governor Yellen did not sound excessively concerned about higher oil prices, noting that oil price shocks have historically generated few second-round inflation effects in the US. Richmond Fed President Lacker, a non-voter in 2011, said that oil price gains so far do not pose a risk to the economic recovery. Our US economists agree and, on Friday re-affirmed their US growth forecasts for 2011. Reinforcing their view, they note that the University of Michigan consumer sentiment reading for late February rose to 77.5 from 75.1 (cons. 75.4) despite higher oil prices. US Q4 GDP growth was revised down to +2.8% from +3.2% annualised rate. Attention now turns to Fed Chairman Bernanke\u2019s congressional testimony on Tuesday and Wednesday for any guidance on the future of the Fed\u2019s bond-buying program.
\n
\nEUR<\/em><\/strong><\/p>\n

ECB Vice President Constancio said central bankers must be willing to be pre-emptive, and that the ECB remains extremely vigilant on inflation expectations. Nevertheless, he downplayed speculation that the ECB might be forced to react to the recent increase in oil prices saying that \u201cmonetary policy does not respond immediately to such a supply shock, nor should it\u201d..
\nECB Governing Council member Draghi said central banks are currently trying to assess whether the spike in oil prices will have a permanent effect on inflation or whether it is a one-off shock. He noted that mid-term inflation expectations remain well anchored, but that the appearance of \u201cinflationary tensions\u201d requires careful assessment of \u201cthe timing and methods for restoring normal monetary conditions and interest rates\u201d. He stressed that the ECB must prevent \u201cthe stimulus of international prices from passing through to domestic prices and wages in the longer term\u201d.
\nIreland\u2019s general election took place on Friday, and counting of votes continues. At the time of writing 150\/166 seats have already been filled and, in line with opinion polls, opposition parties have made large gains. Fine Gael leader Kenny said he would begin provisional talks this week with European officials on possible adjustments to the terms of the EU\/IMF financial support Packaged.
\n
\nGBP<\/em><\/strong><\/p>\n

BoE Deputy Governor Bean showed no sign that he might vote for a rate hike in the near future. Rather, he fully aligned himself with Governor King\u2019s view that higher commodity prices, a VAT hike, and sterling weakness are largely to blame for high UK inflation.
\n
\nCHF<\/em><\/strong><\/p>\n

We believe Thursday\u2019s ECB press conference in particular poses upside risks to EURCHF, given that President Trichet may sound even more hawkish. Second, the SNB has continued to lower short-term money market rates, which will likely support EURCHF by widening the rate differential with the Eurozone. Finally, the Swiss franc has been boosted by risk aversion over the past few days. However, unless tensions spread to some of the larger countries in the Middle East, market jitters may ease, leading to the reversal of some safe-haven inflows to the Swiss franc.
\nThe KOF leading indicator came in stronger than consensus at +2.18 (cons. 2.06) and January\u2019s print was revised up to 2.16 from 2.10
\n
\nNZD<\/em><\/strong><\/p>\n

Our team of analysts changed their RBNZ forecast in the wake of last week\u2019s tragic earthquake. He now expects a 50bp cut to the OCR on March 10, and notes that it could take 6 months or more for this emergency cut to be withdrawn. Previously, he had been looking for the next 25bp hike to come in September.
\nFinance Minister English said the government would largely bear the cost of the rebuilding effort and would issue more short-term debt to pay for it. Earlier Prime Minister Key distanced himself from the idea of imposing a levy, saying that doing so would slow the economy. Key estimated the total cost of earthquakes since September at N$20 bn, equivalent to about 10% of GDP.
\n
\nCAD<\/em><\/strong><\/p>\n

Finance Minister Flaherty said he sees no reason at this stage to be especially concerned about long-term inflationary effects as a result of higher global oil prices.<\/p>\n

TECHNICAL OUTLOOK<\/strong>
\nUSDCAD eyes 0.9745\/12.
\nEURUSD BULLISH Rise through 1.3838\/62 would expose 1.3948. Near term support is at 1.3649.
\nUSDJPY BEARISH Push below 81.13 would expose 80.93. Initial resistance defined at 82.52.
\nGBPUSD BULLISH Initial resistance is at 1.6255 ahead of 1.6279\/99 zone. Support is defined at 1.6031.
\nUSDCHF BEARISH Downtrend continues with focus on 0.9200 and potential for 0.8951 next. Near-term resistance at 0.9392.
\nAUDUSD BULLISH Pressure on 1.0200 initial resistance; next resistance at 1.0256. Support lies at 1.0002.
\nUSDCAD BEARISH Outlook is bearish; the pair eyes 0.9745\/12 zone. Near-term resistance at 0.9816, previous low.
\nEURCHF BEARISH While resistance at 1.2958 holds, expect losses towards 1.2706. Move below this level would open up 1.2686\/1.2592.
\nEURGBP BULLISH Break of 0.8593 would expose 0.8619. Near-term support lies at 0.8470.
\nEURJPY NEUTRAL Model has turned neutral; 113.46 and 111.38 mark the near-term directional triggers.<\/p>\n

Forex Daily Market Commentary<\/strong><\/em> provided by<\/em><\/strong> GCI Financial Ltd<\/strong><\/a>.<\/strong><\/span><\/p>\n

GCI Financial Ltd (\u201dGCI\u201d) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (\u201dForex\u201d) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (\u201dCFDs\u201d) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.<\/p>\n

DISCLAIMER: GCI\u2019s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.<\/p>\n","protected":false},"excerpt":{"rendered":"

Our team of analysts now expects the RBNZ to cut the OCR by 50bp at the upcoming policy meeting, in response to last week\u2019s tragic earthquake. Brent crude pushed even higher on supply concerns, and is trading at $113.88\/bbl at the time of writing; gold is hovering at $1413.95\/oz.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-19840","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/19840","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=19840"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/19840\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=19840"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=19840"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=19840"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}