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  • Writer's pictureMike Paterson

RBNZ surprises markets.

Wednesday 28 February 2024

The RBNZ this  morning left interest rates on hold but reduced their OCR tracking in a dovish surprise for markets. Many hadn't ruled out a hike but just shows how much the second-guessing is futile.  Kiwi bonds rallied sharply while NZD slid 1%. Australian Jan CPI also missed, further increasing thoughts around a potential soft landing. AUD is lower as a result. The Greenback has found some buyers again amid firmer US bond yields after some month-end supply into yesterday's London 4pm fix per my tweet.

US Core PCE in focus tomorrow while today we have the Fed's Bostic and Wiliams set to speak. BoE's Mann will be of interest for GBP traders The Ukraine/Russia war and Middle East Israel/Hamas/Houthi/Hezbollah/Red Sea tensions are all still casting their own shadow so while all the uncertainty remains, both economical and geopolitical, remember to identify your preferred risk reward levels and let the algos do their thing along with the natural and speculative flows. Don't get greedy or over-analyse. These are tight ranges and will produce regular jobbing opportunities therefore while the jury remains out.

Equities are in retreat after yesterday's rally  but should remain underpinned overall albeit still with the threat of some correction imho. WTI capping at $78.80 yesterday after another rally on Gaza ceasefire hopes and now testing $77.50-60 as we range tightly still. Gold capping into $2035 this time and now testing $2025 as we continue to range tightly.

GBPUSD: Failure around 1.2700 yet again helped by the offers building up there I've been highlighting and the USD demand and now testing 1.2620-30 in the retreat.  remain poised for further rally sells when momentum fades as we continue to range overall. EURGBP: Basing around 0.8545-50 again after capping into 0.8560 once more  as the BOE/ECB debates continues. GBPJPY: Testing 190.30 as I type after capping into 191.00 again as sellers remain poised but still underpinned overall.

EURUSD: Breaking down through 1.0830 this morning and testing 1.0800 amid the USD demand with rallies now limited to 1.0850. Some pips banked and I remain a rally seller.

USDJPY: Capping around 150.80 again after duly finding bids into 150.00 and then re-holding the 150.30 support line amid the USD demand. I remain a rally seller as preferred side overall given that the BOJ still don't want this racing away too far. Some decent size options in play at 151.00.

Traders - For more detailed analysis across a larger number of FX pairs including market order flows and options expiries email

Interbank rates: 08.45 GMT

GBPUSD    1.2635

EURUSD    1.0809

EURGBP    0.8554

GBPEUR    1.1690

USDJPY    150.75

GBPJPY    190.51

GBPCAD    1.7120

GBPCHF    1.1128

GBPZAR    24.3444

GBPHKD    9.8348

USDCHF    0.8805

EURCHF    0.9522

EURHKD    8.4058

AUDUSD    0.6497

NZDUSD    0.6102

USDCAD    1.3577

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