ForexLive Asia-Pacific FX news wrap: NZD jumped on a more hawkish RBNZ Statement

• Federal Reserve Bank of Chicago President Goolsbee speaking Wednesday – FOMC minutes later
• RBNZ Orr: Expect inflation to fall back into target band by end 2024
• RBNZ Governor Orr speaking at the top of the hour – live link
• European Central Bank President Lagarde speaking on Wednesday
• NZD jumps after RBNZ raises its path ahead for rates, suggests later cuts
• Reserve Bank of New Zealand leaves cash rate on hold at 5.5%, as widely expected
• Trading in China’s first batch of ultra-long bonds suspended due to 13% price jump
• Governor of the Riksbank Erik Thedéen is speaking on Wednesday
• UK expect doing business in China to become harder over the next five years
• PBOC sets USD/ CNY mid-point today at 7.1077 (vs. estimate at 7.2376)
• Bank of England Deputy Governor Breeden speaking Wednesday
• PBOC is expected to set the USD/CNY reference rate at 7.2376 – Reuters estimate
• Japan April Exports +8.3% y/y (expected +11.1%) Imports +8.3% (expected +9.0%)
• Japan March Machinery Orders +2.9% m/m (expected -2.1%)
• Fed Mester says to expect above trend growth for the year
• Reuters Tankan report for May: Manufacturing sentiment 9, unchanged from April
• Goldman Sachs wary of being short US dollars
• ICYMI – Deutsche Bank raised its 2024 year-end S&P 500 target to 5,500
• Markets in Singapore are closed on Wednesday, 22 May 2024 for a holiday
• Forexlive Americas FX news wrap 21 May: Another day. Another dose of Fedspeak.
• ICYMI – European Central Bank President Lagarde ‘really confident’ inflation under control
• ICYMI – US to release 1 mn barrels of gasoline from reserve
• Private survey of oil inventories shows headline crude build vs. draw that was expected
• ICYMI – China considers slapping higher tariffs on some imported cars
• Record closes for the NASDAQ and S&P index
• Trade ideas thread – Wednesday, 22 May, insightful charts, technical analysis, ideas

We
had some data from Japan today: Reuters Tankan, April trade data,
March machine orders data. None of it moved the yen too much.

We
also had comments from Fed officials, Federal Reserve Bank of
Cleveland President Loretta Mester and Federal Reserve Bank of Boston
President Susan Collins. Both emphasised that rates would be held
restrictive for longer, in line with pretty much everything we’ve
been hearing from the Fed.

The
main event for the session, though, was the Reserve Bank of New
Zealand Monetary Policy Statement, followed an hour later by the
Bank’s media conference.

The
Statement was read as quite hawkish. While the Official Cash Rate
(OCR) was left unchanged at 5.5%, the ‘path’ for rates ahead was
raised by the Bank, implying later rate cuts. The peak the Bank
projected was 5.61% (up ever so slightly from 5.6%) in September
this year. The Statement and Minutes emphasised that policy needs to
be remain restrictive until inflation falls further:

• “Annual
  consumer price inflation remains above the Committee’s 1 to 3 percent
  target band, and components of domestic services inflation persist.
  The Committee agreed that monetary policy needs to remain restrictive
  to ensure inflation returns to target within a reasonable timeframe.”

The
Statement and Minutes noted developments pointing to inflation
continuing to fall:

• “the
  Committee is confident that maintaining the OCR at a restrictive
  level for a sustained period will return consumer price inflation to
  within the 1 to 3 percent target range this calendar year.”

The
Bank signalled it won’t be cutting the OCR until Q3
of 2025.

NZD/USD
was marked higher on the Statement, topping out just over 0.6150.

The
media conference that followed had Governor Orr not sounding as
hawkish as the statement. NZD/USD drifted back down and is circa
0.6120 as I post.

The
jump higher for NZD/USD dragged AUD up, not to the same extent. In
local Australian news Avian Influenza has been found on a farm, the
first case in Australia. It won’t be the last.

Major
FX elsewhere was more subdued as traders await the Federal Open
Market Committee (FOMC) May meeting minutes later today.

This article was written by Eamonn Sheridan at www.forexlive.com.