New Zealand is the star of the day so far

The Kiwi dollar has been the star so far today. The major news that was out overnight was in New Zealand where the jobs report was out and once again, the jobs market in NZ outperformed expectations. This gave a further boost to the Kiwi dollar adding to the headache of the RBNZ who weren’t happy with the high rate of the Kiwi dollar already. They have been trying to reduce the exchange rate for the past few months but have not been very successful so far. The better and better news coming out of NZ would only add to their headache.

The RBNZ is expected to cut their interest rates atleast once more this year and probably they could do it twice as well. This shows their desperation to lower the exchange rate of the Kiwi dollar which is slowly beginning to affect their economy.

Overnight, the USD was hit badly against all the currencies and especially against the GBP. The GBP visited its post-Brexit lows at around 1.28 and after forming a double bottom there, it has rallied against the dollar and has broken through a strong resistance at 1.30.  As can be seen in the chart below, it is now taking a breather after breaking through the resistance and we could expect it to move towards 1.32 on further USD weakness.

The US stocks were also hit hard yesterday and this was reflected in USDJPY as well which made a brief trip below 100. It should be interesting to see what the Bank of Japan does now. So far, there hasn’t been much action from them today. With the FOMC statement out later today, it should be an interesting day of trading ahead.