Forex Marketz Daily Forex News – Fully Markets Update
The Kiwi dollar took a large hit this morning against its major G 20 trading partners. The NZD/USD Forex market saw its largest daily decline in over a month as the Kiwi dollar sold off. New Zealand Prime Minister
Bill English approved a housing infrastructure fund this morning. The project, quoted in Kiwi dollar terms (NZD), will allocate $1 billion. This new housing fund will be used to speed up the delivery of 60,000 units. This delivery will take place over the next decade. It will be across five different zones including Auckland.
The news crossed the wires around the same time that local New Zealand government 2 year government bond yields fell. These bond yields are moving lower as investor expectations over Reserve Bank of New Zealand (RBNZ) hawkish expectations are also falling.
Right now, currently, investors through overnight index swaps (OIS) are starting to price in a better than even chance of an official cash rate (OCR) hike in March of 2018. However, swaps remain fairly low at just 52.2 percent.
The Kiwi Dollar Follows the RBNZ
The RBNZ current monetary policy is to use macro-prudential tools. This looks into methods like loan to value ratios rather than rate hikes in order let the air out of the bubble in a rather strong housing market. However, there is an increase of housing supply that is easing upward price pressure on house prices. This could translate into a cooling off of inflation. This, in turn, is pushing back the timeline with the RBNZ to start withdrawing stimulus from the market. This brought on today’s negative response from front end government bond yields and the New Zealand Dollar.
