Kiwi jumps after hawkish statement by RBNZ
The New Zealand dollar jumped today after the RBNZ released its interest rates decision. As expected, the bank left interest rates unchanged at 1.75% and pointed that the rates could remain unchanged until 2021. The bank also reiterated that the direction for that decision could be up or down. It also said that while the country is closer to full employment, this has not been translated to inflation, which is still below the target of 2%. The statement added:
Despite the weaker global impetus, we expect low interest rates and government spending to support a pick-up in New Zealand’s GDP growth over 2019. Low interest rates, and continued employment growth, should support household spending and business investment. Government spending on infrastructure and housing also supports domestic demand.
The price of crude oil rose in overnight trading after the American Petroleum Institute (API) released its inventory numbers for the past week. The data showed that inventories shrank by 998K barrels. This was much lower than the previous week’s increase of inventories by 2.5 million barrels. In addition, it was reported that the US could reach more than 13 million barrels a day by 2020. The country produces more than 11 million per day. This news came a day after an OPEC report showed that members had significantly reduced their output. Today, traders will watch out for inventory data from the EIA.
Focus will also remain on sterling and UK stocks. Today, the UK will release its inflation numbers. These numbers are expected to show that consumer prices rose by 1.2% in January. This will be lower than December’s rise of 2.1%. The core CPI is expected to have remained unchanged at 1.9%. The Retail Price Index (RPI) is expected to have remained unchanged at 2.7%. Investors will also continue to follow Brexit news.
The EUR/USD pair continued the upward trend started yesterday and reached a high of 1.1340. This level is close to the 38.2% Fibonacci Retracement level of 1.1355. On the hourly chart, the price is also above the 14-day and 28-day EMAs, which have just made a crossover. The pair’s RSI has moved to almost the overbought level of 70. The pair will likely continue moving up.
The price of WTI crude rose in overnight trading after lower-than-expected inventory numbers. The XTI/USD pair is now trading at 53.94, which is close to last week’s high of 55.80. On the four-hour chart, the pair is above the 61.8% Fibonacci Retracement level. It is also above the 21-day and the 42-day EMA. While the pair will likely continue moving up, this could change if EIA releases a larger inventory build-up.
The NZD/USD pair rose sharply to a high of 0.6845. This level was slightly above the 61.8% Fibonacci Retracement level of 0.6830. The pair is now trading at 0.6845, which is above the 21-day and 42-day EMAs. As the pair climbed, the RSI moved sharply higher to above 70. While the pair could continue moving up, it will likely move slightly lower as bulls take profits. If this happens, it could test the 0.6780 level, which is also the 50% Fibonacci Retracement level.