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Forex Trading: Asian Session Recap and Ranges

Posted by Akhilesh Ganti on Aug 19, 2013 10:03:00 PM

The antipodean currencies were quite active as the RBA minutes and RBNZ Governor's comments caused them to sell off against the US Dollar. RBA minutes indicated that the board might be inclined to cut further though the need was not imminent. Additionally, they stressed that the Aussie was higher than its historical norm and the rate would be, along with Chinese growth prospects, crucial in determining the course of future policy measures as they attempt to re balance the economy. They did note that while the easing cycle has had an impact on housing prices, inflation remained contained. Aussie sold off on this release.

NZD RBNZ 081913 15min

The Kiwi fell sharply on RBNZ Governor Wheeler's comments that “Our exchange rate is overvalued relative to what would be sustainable long-term in the absence of sizeable increases in our terms of trade and productivity.” It is not a surprise that they would like a weaker currency given that they are primarily an export driven economy. The dilemma is that housing prices appear to be spiralling out of control and they cannot raise the OCR to try and control this because that would further strengthen their currency. To combat this they are planning on allowing banks to impose restrictions on home lending in an attempt to slow down home price growth.

{chart:Bloomberg}(click to enlarge)





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