The Kiwi enjoyed a series of gains following the announcement by the Reserve Bank that it will maintain current levels on interest rates. Moreover, investors were pushed forward after Reserve Bank Governor Graeme Wheeler indicated that his institution will likely have to end their stimulus activities in the near future. Analysts note that New Zealand has experienced a recent boom in their housing market, and the central bank is still attempting to adjust to the ongoing changes.
Analysts point to a growing chorus of central bank heads including Fed Chairman Ben Bernake who have hinted recently about the need to reduce quantitative easing as the economy rebounds. That said, it is too early to know when these measures may materialize as they are heavily dependent on jobs numbers and other economic indicators. Moreover, the markets are likely to experience continued volatility as investors respond to such comments.
Japan to Release CPI as the Yen Climbs
The Consumer Price Index for Japan is set to be released today 25 July 2013, observers observers with additional information regarding the current state of the Japanese economy. In the lead up to the report, many experts believe that the CPI will rise from where it has been in the negative figures. Analysts remind readers that the CPI is influential in the creation of policy on interest rates as the leadership may attempt to stem inflation. However, in this instance, the Japanese have been attempting to encourage inflation in order to help revive their economy following the slow down.
The issuing of the CPI comes as the Yen overtook nearly all of its rival currencies in trading, including the USD. Analysts believe that the Yen may continue to climb before returning to more normal rates. Traders are advised to tread cautiously as the Yen may take a sudden turn as the markets readjust.
Aussie Continues to Drop on Hedged Bets
In a continuation of the fall described here yesterday, analysts note the the AUD has been reported to have continued its descent, hitting a four and a half year low against its neighbor, the NZD. It has been cited by experts that part of the driving force behind the drop has been related to the hedging of bets that the central bank will change their overnight lending rates in August.
In general, observers have cited a shorting of the AUD in trading that has had a significant effect on the value of the currency.
Traders are advised to proceed with caution with the Aussie as many of its rivals including the NZD and the Yen have been on the rise in recent days, helping to shake up the markets.