by SignalFactory · February 19, 2020 | 06:55:24 UTC
is currently trading at 0.6386 and is down 0.78% on the day so far, traveling
from a high of 0.6441 to a low of 0.6381. Despite the RBNZ’s hawkish
projections, the bird continues to bleed out from the post-meeting highs. there
is not a great deal of news out there to be a catalyst for the downside other
than GDT Price Index down 2.9% and Moody’s cuts China forecast to 5.2% for
milk powder fell 2.6%
Zealand’s key export product, whole milk powder, fell 2.6% and was matching
yesterday’s futures market predictions of a 3% fall. Skimmed milk powder prices
fell 2.6%, butter fell 3.9% (despite reduced volume for this auction), and
anhydrous milk fats fell 5.5%, while cheddar cheese rose 5.3%. “Last
night’s results are unsurprising given the continuing uncertainty regarding the
Coronavirus outbreak, the previous GDT auction on 4 February also likely
affected by such,” analysts at Westpac explained, adding that “the
steps that China has taken to contain the outbreak – such as limiting the
movements of people – have kept many factories closed, which has meant less
demand for their inputs, including milk powder. North Asian demand at last
night’s auction was lower than usual, but only slightly so.”
typically softened overall but this was largely in part to the news whereby
Apple announced it would fall short of its Q1 sales targets because of slower
iPhone production and weaker demand in China.
other news, which is more positive for risk appetite, China announced further
cuts to tariffs on US products including agricultural goods such as pork, beef
and soybeans and crude oil and natural gas. “The tariff cuts are in
addition to the cuts already announced as part of the Phase 1 deal but are
likely to be needed in order to achieve the USD200 billion of imports committed
to as part of the Phase 1 deal,” analysts at ANZ Bank noted.
sentiment support for kiwi fading
now, the RBNZ policy looks set to remain on hold. However, if evidence mounts
that the impact from coronavirus is set to be significant, the RBNZ will likely
be forced to react. Markets are starting to trade that assumption, although
putting aside any risks stemming from the coronavirus, there would indeed
appear to be the reason for optimism in New Zealand.
“RBNZ this morning discussed the possibility that there
could be a positive impetus on wage inflation and on CPI inflation.
Policymakers also noted the effects of recent minimum wage increases, pay
equity settlements and large collective agreements in the public sector,”
analysts at Rabobank argued. However, it is not a done deal that the RBNZ will
remain on hold and the coronavirus impact in tourism could be a highly damaging
outcome for the economy. Tourism is a significant export for New Zealand and in
recent years, Chinese visitors have made a key contributor to overall revenue.
Pending order should be placed as a signal arrives (at “From” time). “Till” time is intended to forced exit. Any open trade is “Filled” when “Till” time is about to be reached. Any pending order is “Cancelled” when the “Till” time is about to be reached. Use trailing-stop to maximize profit.
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