NZ interest rates move higher again
FX & MM, 30 Jul 2010
NZ interest rates move higher again
- But RBNZ dampens expectations
- BoE governor less downbeat on economy
Health minister Anne Milton has encouraged the health industry not to describe fat people as obese, but to call them fat. If the minister's push for plain speaking were to catch on, a bonfire of public sector euphemisms would burn brightly. 'Members of the public' would become 'people', 'health and safety' would translate as 'fun prevention' and 'minority ethnic inclusion outreach coordination officer' would be 'jobsworth'.
And 'stable' exchange rates could be described as 'tedious'. That has been the case for most currencies over the last 24 hours. Cable has moved by less than the bid-offer spread. Sterling/euro is within a dozen ticks of Wednesday's opening. There was no help from the economic data; they did nothing. Nobody cared that German inflation accelerated from 0.9% to a provisional 1.1%. When US durable goods orders fell by -1.0% in June, instead of rising by the 1.0% that economists had predicted, the market did not bat an eyelid.
The only bit of excitement came overnight, again from the antipodes. As expected, the Reserve Bank of New Zealand raised its official cash rate from 2.75% to 3% but Governor Alan Bollard spoiled the party. The NZ dollar fell against everything when he said the 'pace and extent' of future rate increases would be more moderate than he had outlined last month. Investors had not been prepared for the change of tone so they sold the Kiwi, taking it two cents lower against the pound. Against the Australian dollar it almost precisely reversed the one-cent gain it had achieved 24 hours earlier as a result of lower than expected Australian inflation.
Bank of England Governor Mervyn King's attendance at the Treasury Select Committee went off without event. His comments were in line with recent Monetary Policy Committee minutes and elicited no reaction from sterling. The governor was evasive at times: Answering a question about the impact of the emergency budget, and the risk of it derailing the recovery, he said 'I don't think it made a significant difference to whether we would get what is technically called a double-dip recession.' But a difference to what, Dr King?
Sterling did wobble briefly this morning after Nationwide announced a -0.5% fall for house prices in July and a slowdown to 6.6% in the annual rate of increase. The only other figures it has to contend with today are those for money supply and mortgage lending this morning. From Euroland come a bunch of personal and corporate confidence measures as well as German unemployment. Canada entertains with its industrial product and raw material price indices while the United States chips in with the weekly jobless numbers. Due out overnight are UK consumer confidence, New Zealand building permits, Japanese inflation and Australian private sector lending. With the best will in the world it is hard to find anything on that list likely to get the market off its collective backside.