The RBNZ delivered its second rate cut in a row as expected but the market reaction has been quite surprising in that NZD rebounded on the news. The dollar had sold off heavily in recent weeks on anticipation of a cut, so some of the move could be short covering against the news. It’s also possible that some traders may have viewed the statement as perhaps not as dovish as it could have been. The central bank indicated low inflation, falling commodity prices and a softer growth outlook for the cut. Governor Wheeler continued to talk down the dollar but not as aggressively as in the past, indicating that the falling NZD has helped to support exports but the further depreciation remains necessary due to lower commodity prices. Traders appear to have taken the comment “some further easing seems likely” as being a bit wishy-washy, perhaps suggesting that the RBNZ may only be looking to make one more cut for a total of 2-3 this year, and perhaps not give back all four of last year’s OCR increases. Hawkish versus dovish central banks was a running theme though today’s forex trading. USD rallied on speculation that the Fed could be back on track toward raising interest rates this year and that we may hear more about their plans at next week’s meeting. Meanwhile, GBP took off following Bank of England minutes which showed that the Bank remained on hold due to the crisis in Greece. Excluding that situation, however, MPC members have become more concerned about inflation risks and it appears that pressure to move up the timetable for UK interest rate liftoff could grow in the coming months. On the other hand, resource currencies remained under pressure as commodity prices fell again. Gold broke under $1,100/oz while WTI fell back under $50.00/oz as traders continued to flee for the exits. A surprise increase in US inventories spooked energy traders while gold remains caught in the middle of a perfect storm of lower contagion fears, a rising USD and lower inflation expectations. The crude oil drop particularly impacted CAD which fell to its lowest level in over ten years. US stock markets continued to fall through the day. While Apple and MicroSoft got much of the blame, what today’s trading (two majors unable to capitalize on better than expected headline earnings) really showed was that whether because of seasonality, valuations, liquidity or something else, traders at this point in time appear more interested in looking for reasons to get out of long positions than in commiting more capital to stocks. With the seasonally weakest time of the year for stock markets approaching, indices and shares appear vulnerable. Corporate News American Express $1.42 vs street $1.32 Qualcomm $0.99 vs street $0.95, guides next Q to $0.75 -$0.95, launches restructuring, considering separation of some businesses Texas Instruments $0.65 as expected, guides next Q to $0.62-$0.72 below street $0.75 Newmont Mining $0.26 as expected Economic News Significant announcements released overnight include: NZ RBNZ interest rate 0.25% cut to 3.00% as expected UK Bank of England minutes 9-0 in favour of maintaining current interest rate and QE targets US DOE crude oil inventories 2.4 mmbbls vs street (2.0 mmbbls) US FHFA house prices 0.4% as expected US existing home sales 5.49M vs street 5.40M Upcoming significant announcements include: 9:50 am AEST Japan trade balance street ¥46B 3:00 pm AEST Singapore consumer prices street (0.3%) 3:00 pm AEST Singapore core CPI street 0.1% 8:00 am BST Spain unemployment rate street 22.5% 8:30 am BST Sweden unemployment rate street 9.0% 9:30 am BST UK retail sales street 4.8% 9:30 am BST UK retail ex auto and fuel street 5.1% TBA South Africa interest rate 0.25% increase to 6.00% widely expected 8:30 am EDT Canada retail sales street 0.6% 8:30 am EDT Canada retail ex auto street 0.8% 8:30 am EDT US jobless claims street 278K 10:00 am EDT US leading index street 0.3% 10:30 am EDT US natural gas street 72 BCF CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.