Daily FX Trading Update: RBNZ Cut Interest Rates to 3.25% – June 11, 2015

New Zealand fifty dollar notes in a stack.

The US dollar had a mixed FX trading performance, as the currency reacted mostly to risk sentiment. There have been no major reports out of the US economy yesterday, leaving traders to position themselves ahead of today’s US retail sales release. The headline figure is expected to show a 1.1% gain while the core version of the report could print a 0.7% uptick, which would reflect stronger increases compared to the previous month. Upside surprises could renew calls for a Fed rate hike in September, which might allow the dollar to regain ground.

The euro pared its recent gains to the dollar and most of its FX trading rivals due to the lack of positive developments in Greece. Data from the euro zone was also mostly weaker than expected, with both France and Italy reporting weaker than expected industrial production data. French employment data and CPI are up for release today and another round of strong figures could allow the shared currency to regain ground.

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The pound carried on with its FX trading climb yesterday, despite weaker than expected manufacturing production data from the UK. The report showed a 0.4% drop versus the projected 0.1% uptick while industrial production showed a stronger than expected 0.4% gain. There are no major reports due from the UK economy today.

The franc gave up most of its recent FX trading wins, as there were no reports from Switzerland to keep the currency supported. There are still no reports lined up from the country today, leaving the franc to take its cue from the euro or from overall risk sentiment.

The yen enjoyed a strong FX trading rally on the heels of Kuroda’s remarks in yesterday’s Asian trading session. The BOJ head said that the excessive gains of the currency have been corrected and that the real effective exchange rate still reflects yen weakness. Market watchers took this as a sign that the BOJ won’t take any additional measures to spur currency depreciation. Earlier today, Japan’s BSI manufacturing index showed a fall from 2.4 to -6.0 instead of improving to the estimated 3.2 reading.

The RBNZ decided to cut interest rates by 0.25% in their latest policy statement, triggering a sharp selloff for the Kiwi. Governor Wheeler indicated that further easing moves are likely since the dairy sector hasn’t recovered and that commodity prices could keep dropping. Meanwhile, Australia printed stronger than expected jobs data, as the economy reportedly added 42K jobs in May and brought the jobless rate down to its yearly low of 6.0%. Chinese industrial production and retail sales figures are up for release later today.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com