As mentioned in the previous article, last week began with the meeting of the Reserve Bank of New Zealand on monetary policy.
The RBNZ has revised upwards its estimates on the official discount rate, consistent with the monetary policy statement of November and announced an increase of 25 basis points by March 2020.
The New Zealand dollar has collapsed after the declaration of Central Bank’s monetary policy, losing about half a cent against the US dollar. The New Zealand dollar has quickly dropped to 72,57 US dollar from 73,02 before the declarations of the RBNZ.
Completely reverse route has touched the US dollar – yen currency pair that gained ground in the week.
USD / YEN rose to 10-day highs (100,710) due to the promise of Donald Trump that tax cuts in the United States is very close.
Donald Trump announced the arrival of ‘phenomenal’ tax reform, strongly bringing back the bet on the reflation. An American economic growth above expectations might be accompanied by higher interest rates by the Fed pledged to prevent the US economy from overheating.
All eyes have been focused on the long-awaited meeting between new American President and the Japanese prime minister, Shinzo Abe that took place on Friday evening.
Even China received some good news. There has been a great recovery in exports (+ 7,9%) thanks to the increase in global demand that has brought China’s monthly trade surplus to a record of almost a year and a half (51,35 billions of dollars).
The good news, however, only adds fear for Donald Trump effects of protectionism, which aims to fight the deficit on the US trade balance.
The increase in the trade surplus has happened also for the United States who have respected and amazed the expectations expressed on the economic calendar with the analyst consensus.
For the last month the index of import prices in the US rose of 0,4%, above the +0,2% expected. Export prices, however, met the expectations of analysts and went down to 0,1%.
The political uncertainty will be the strongest market mover in the week that goes from the 13th to 17th of February, both in the United States – with Trump and Yellen – and in Europe, including the new focus on the crisis in Greece and the approaching elections in France and Germany.
The chairman of the Federal Reserve, Janet Yellen, will testimony before the Senate Banking Commission of the US Congress. Since the last December, Janet Yellen has no longer talked about monetary policy. The FOMC members seemed divided about this matter and now we have to wait the revelation of the plans on taxes and infrastructure announced by Donald Trump.
On Tuesday will be known the results on retail sales and US inflation, while in the Eurozone the focus will be all on the Gross Domestic Product.
Thursday afternoon there will be a meeting between the IMF and Eurozone leaders on the crisis in Greece, looking for a new agreement to rescue the country that lost more against the crisis.