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Weekly Comment – RBNZ meeting and flash PMI reports take centre stage



The USD reached a 16-month high after a robust US retail sales report, suggesting that high inflation is not yet dampening consumer spending. In the upcoming week, a raft of PMI data and the Reserve Bank of New Zealand interest rate announcement will dominate the markets.  

The highlights:
  • In New Zealand, the Reserve Bank is widely expected to raise interest rates on Wednesday. The country’s inflation rate has fired up, reinforcing the odds of a 50 basis points interest rate hike. This leaves scope for disappointment in the NZD in case the central bank simply goes for a regular 25 basis points hike.
  • Flash PMI results for the Eurozone and UK will be released on Tuesday. This could pose a downside risk for the EUR amid growth concerns and a resurgence in Covid-19 cases.
  • Meanwhile, in America, flash PMI and the latest FOMC minutes will hit the markets in the upcoming week, revealing how the US economy is holding up and the Fed’s views around normalization. This could be crucial for the USD, which has dominated the FX markets lately.
  • Oil slid as investors speculate on how much supply the major economies might release from their strategic reserves to cool global energy prices. Gold witnessed a minor pullback over the week, which may come down to some profit taking.
  • The US stock market hit new all-time highs, with chipmakers and tech stocks leading the rally, while Chinese equities were hit once again amid disappointing earnings.

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