Here’s Wednesday’s ‘Just A Minute’ bringing you a 60 second summary of what’s happening in the markets:
Main Trading Event Of The Day: NZD Official Cash Rate @ 20.00; RBNZ Monetary Policy Statement @ 20.00 GMT
WHAT WE’RE WATCHING TODAY
NZ Dollar Slips Ahead Of Reserve Bank Policy Review
The New Zealand dollar fell from a post-float high on a trade-weighted basis ahead of the Reserve Bank policy review, which is likely to kick off a tightening cycle with a rate hike. The trade-weighted index rose as high as 79.68, and was at 79.46 at 5pm in Wellington from 79.50 yesterday. The dollar traded at 84.64 US cents at 5pm from 84.61 cents at 8am, and down from 84.80 cents yesterday. Traders have priced in a 101% chance of a rate hike by Reserve Bank governor, Graeme Wheeler, which would lift the appeal of the dollar. Wheeler has previously signalled the official cash rate will have to rise from its record-low 2.5% to head of the threat of future inflation, and investors will be gauging the extent and pace of any future hikes. The central bank has kept OCR at 2.5% since March 2011. New Zealand’s relative economic strength has outperformed its peers, with neighbour Australia under pressure from weak Chinese trade weighing on iron ore and copper prices. Traders will be looking at Australian employment numbers to see how the economy is tracking. The New Zealand dollar rose to 94.48 Australian cents from 93.94 cents yesterday while the local currency fell to 87.20 yen from 87.57 yen and traded at 61.10 euro cents from 61.14 cents. Meanwhile, New Zealand stocks fell amid global concern over Chinese bond defaults and weakening economic data and ahead of the expected rise in interest rates from the central bank. The NZX 50 Index fell 5.407 points, or 0.1%, to 5096.530, the third straight decline. Within the index, 17 stocks fell, 18 rose and 15 were unchanged. Turnover was $133 million.
Gold Still Holding Onto Gains
Gold held on to overnight gains on Wednesday to trade near its highest in four months, as global uncertainty over economic growth and tensions in Ukraine increased the metal’s safe-haven appeal. Gold for April delivery rose another $11.70 to $1,358.40 an ounce. A day earlier, gold scored its second-straight advance as worries over Russia’s standoff in Ukraine and fears of a slowdown in China drew buyers to the perceived safety of the precious metal. Investors are closely watching how long gold will sustain its rally until there is a dramatic drop in prices amid easing tensions in Ukraine. It is expected that as long as uncertainty and fear exists about the situation, gold should continue to see gains. Copper has also been in focus this week due to its recent poor performance. The commodity is by far the worst performer among all precious and base metals, with a drop of almost 10% this year. On Wednesday, high-grade copper for May delivery remained flat at $2.95 a pound.
Bitcoin Coming To Wall Street
New York financial authorities confirmed on Tuesday that they would soon begin accepting applications for virtual currency exchanges including those dealing in bitcoins, in a sign of regulators’ growing interest in the technology. Approved applications will ultimately have to adhere to a proposed regulatory framework which will be developed by the end of June. Financial regulators in the state started looking at the use of Bitcoin and other virtual currencies last year. News of the regulations comes following the fall of Tokyo-based Mt. Gox, previously the largest exchange for buying and selling bitcoins which was most likely due to a hacking attack and mismanagement. This further demonstrates the urgent need for stronger oversight of virtual currency exchanges, including robust standards for consumer protection, cyber security, and anti-money laundering compliance. The brokerage industry’s own watchdog, FINRA, has warned that the lure of a potential quick profit should not blind investors to the virtual currency’s significant risks.
That sums up today’s highlights! We hope you have a profitable day on the markets.
