NZD took a hit following the (much expected) interest rate cut. The only explanation for this is that market participants had reduced their positioning prior to the meeting, and then loaded up again (short) when they received confirmation. The RBNZ continued to suggest rates could go lower, with data dependent moves. However, the rest of the statement was clearly dovish.
However, we have already moved quite a lot today and I do not like fresh Nzd short bets at current levels.
Stronger than expected AUD labour report supporting Aud despite being back in "sell rallies" mode. The Aud was also supported by good China CPI, and the BHP dividend payout. Despite the strong trend in Aud, it is not compelling to short today.
Jpy spiked following comments from LDP lawmaker Kozo Yamatomo hinting at possible further easing by BoJ during the next meeting (Oct. 30th). Nothing too important.
Today’s real focus will be the BOE’s monetary policy decision. Expectations are for rates to remain unchanged. Today is called "Super Thursday" because we get the simultaneous publication of the meeting minutes. These will be the main event, and will provide a timely sense of how the perceived balance of risks is shifting in the eyes of the MPC. So watch Gbp today, but act only after we see the colour of the minutes.
Charts for Today:
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