2 February, AtoZForex.com, Lagos – The Reserve Bank of Australia (RBA) interest rate was held at 2.00% as largely expected. Policy makers opted to continue waiting to observe the effect of the ongoing global slowdown and China worries. Although, RBA governor Glenn Stephens left the door open for further cuts but also remained optimistic about domestic economic conditions.
For the day, the kiwi and the sterling are likely to be the major movers as we have key data releases from New Zealand and UK.
Fed Fischer on rate hikes
Speaking about the US economy and monetary policy at the council on Foreign Relations, Fed Fischer appeared to soften his tone towards further expected rate hikes. He noted that global financial conditions and risks could derail the global economy and slow the economic growth in the United States. In fact, Bank of America Merrill Lynch expects January’s Nonfarm Employment report to reveal a mere 170,000 job additions. Moreover, crude oil price declines and continued strengthening of the USD have kept inflation lower than previously expected, Mr Fischer added, simply noting that he “does not know” whether a March hike will be appropriate.
Nevertheless, Mr Fischer stressed that he expects the oil pressure on inflation to eventually subside. He believes the job market will continue to strengthen, and added that policy remains accommodative even after the rate increase in December.
UK Construction PMI (9:00 A.M GMT)
Last month, output growth accelerated from November’s seven-month low. UK construction companies ended 2015 with a robust and accelerated expansion of overall business activity, thereby indicating a rebound of the construction PMI from the slowdown recorded in November. The figure is now forecast to come at 57.6. The sterling rebounded against the dollar yesterday, after a strong fall on Friday. The currency is expected to record further gains, having broken last week’s high.
New Zealand employment change (9:45 P.M GMT)
Today, we have the GDT Price Index, Employment Change q/q, and the Unemployment Rate. The employment change q/q is forecast for a rebound to 0.8%, while the unemployment rate is expected to increase to 6.1% from 6.0%. The NZDUSD pair has been in a consolidation for days, hence, a breakout is expected soon.
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