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  • Main theme sticks  with trade wars, yet headlines are conflicting.  
  • NZD/USD flat on the day and likely into the weekend;  The pair was  15 pips over 24 hours, around 0.6400 overnight.

NZD/USD is currently trading at 0.6406 within  range of 0.6398 and 0.6408. The pair was  15 pips over 24 hours, around 0.6400 overnight is unlikely to be a play into the end of the week considering the lack of scheduled events left on the calendar.  

Indeed, the main theme stays with trade wars, but the mixed and conflicting headlines are not mounting to any meaningful price action at this juncture. Overnight, the main headline came from the South China Morning Post, in an article entitled, “China watching Donald Trump’s response to US Hong Kong bill as it threatens to become new barrier to trade deal,” and bullet points as follows:  

  • One source says Beijing may decide to ‘fight and talk alternatively’ and is now closely monitoring the US president’s next move following the vote by Congress
  • China reacted angrily to the proposals, accusing Washington of interfering in its internal affairs, and may feel obliged to respond.

Looking ahead:

The Reserve Bank will be releasing its six-monthly Financial Stability Report (FSR) next Wednesday. analysts at Westpac do not expect it to include any changes to policy settings:

First, we note that the  RBNZ  will be announcing its final decisions on bank capital requirements on 5 December. It will probably steer clear of commenting on the outcomes ahead of that announcement.

Instead, the main point of interest in the FSR will be around any changes to the loan-to-value ratio (LVRs) restrictions on mortgage lending. These have been loosened twice so far, in November 2017 and 2018. Market opinion is split as to whether the  RBNZ  will loosen them further this time. Our view that there will be no change.

NZD/USD  levels: