AUD
FUNDAMENTAL BIAS: WEAK BULLISH
1. Monetary Policy
At their March meeting, the bank didn’t do much to surprise markets and stuck to a similar script compared to the previous meeting, with the exception of adding the Russia/Ukraine war as a major new source of uncertainty. While Unemployment is at 4.2% and expected to be below 4% throughout 2023, and with...
NZD
FUNDAMENTAL BIAS: WEAK BULLISH
1. Monetary Policy
More hawkish than expected can sum up the February RBNZ policy decision. Even though the bank delivered a 25bsp hike and did not surprise with a 50bsp hike (probability was at 30% before the meeting), they managed to surprise markets with their upgraded projections and plans for QT. Markets were...
GBP
FUNDAMENTAL BIAS: NEUTRAL
1. Monetary Policy
Hawkish surprise with a hint of dovish undertones sums up the Feb BoE decision. The bank announced the start of passive QT and hiked rates by 25bsp as expected, but the vote split was unanimous (9-0) but with a big hawkish surprise being 4 MPC members voting for a 50bsp hike. Inflation forecasts saw a big...
EUR
FUNDAMENTAL BIAS: NEUTRAL
1. Monetary Policy
Hawkish sums up the ECB’s Feb decision. The initial statement was in line with Dec guidance and offered very little surprises (which was initially seen as dovish). However, during the press conference President Lagarde explained that the upside surprises in CPI in Dec and Jan saw unanimous concern around the...
EUR – The euro spiked higher on Thursday following the ECB’s decision to phase out its APP by Q3, pushing EURUSD briefly above the 1.11 handle. However, gains were short-lived, with focus quickly turning back to the Ukraine/Russia war and its economic consequences for the Eurozone.
BK Asset Management argues the diverging economic outlooks between Europe and the...
EUR – The euro gained more than 1.5% against the dollar on Wednesday as risk appetite returned to financial markets and energy and commodity prices eased from recent peaks that resulted from Russia’s invasion of Ukraine and the West’s retaliatory sanctions.
TD Securities noted that the move was driven in part by recent reports that the EUR was discussing a joint...
USD
FUNDAMENTAL BIAS: BULLISH
1. Monetary Policy
The Jan FOMC decision was hawkish on multiple fronts. The statement signalled a March hike as expected, but Chair Powell portrayed a very hawkish tone. Even though Powell said they can’t predict the rate path with certainty, he stressed the economy is in much better shape compared to the 2015 cycle and that...
EUR
FUNDAMENTAL BIAS: NEUTRAL
1. Monetary Policy
Hawkish sums up the ECB’s Feb decision. The initial statement was in line with Dec guidance and offered very little surprises (which was initially seen as dovish). However, during the press conference President Lagarde explained that the upside surprises in CPI in Dec and Jan saw unanimous concern around the...
EUR
FUNDAMENTAL BIAS: NEUTRAL
1. Monetary Policy
Hawkish sums up the ECB’s Feb decision. The initial statement was in line with Dec guidance and offered very little surprises (which was initially seen as dovish). However, during the press conference President Lagarde explained that the upside surprises in CPI in Dec and Jan saw unanimous concern around the...
AUD
FUNDAMENTAL BIAS: WEAK BULLISH
1. Monetary Policy
At their Feb meeting the RBA delivered on expectations by announcing an end to QE purchases, and also upgrading inflation and employment forecasts. These were seen as hawkish developments, but the bank tried as hard as possible to still keep up a dovish impression by saying the ceasing of QE does not...
EUR
FUNDAMENTAL BIAS: NEUTRAL
1. Monetary Policy
Hawkish sums up the ECB’s Feb decision. The initial statement was in line with Dec guidance and offered very little surprises (which was initially seen as dovish). However, during the press conference President Lagarde explained that the upside surprises in CPI in Dec and Jan saw unanimous concern around the...
EUR
FUNDAMENTAL BIAS: NEUTRAL
1. Monetary Policy
Hawkish sums up the ECB’s Feb decision. The initial statement was in line with Dec guidance and offered very little surprises (which was initially seen as dovish). However, during the press conference President Lagarde explained that the upside surprises in CPI in Dec and Jan saw unanimous concern around the...
GBP
FUNDAMENTAL BIAS: NEUTRAL
1. Monetary Policy
Hawkish surprise with a hint of dovish undertones sums up the Feb BoE decision. The bank announced the start of passive QT and hiked rates by 25bsp as expected, but the vote split was unanimous (9-0) but with a big hawkish surprise being 4 MPC members voting for a 50bsp hike. Inflation forecasts saw a big...
NZD – The New Zealand dollar jumped to five-week highs on Wednesday as the RBNZ hiked rates by 25 basis points and signalled a more aggressive path forward may be necessary.
Commenting on the RBNZ’s February meeting, Westpac stated that “the biggest surprise was the extent of the lift in the projected OCR track – higher even than our top-of-the-market forecast...
CAD
FUNDAMENTAL BIAS: NEUTRAL
1. Monetary Policy
Despite STIR markets pricing in close to an 80% chance of a 25bsp hike, the BoC chose to leave rates unchanged at their Jan meeting. However, the bank removed its extraordinary forward guidance and said they now think the economic slack has been absorbed (previously expected to occur somewhere in the middle...
USD
FUNDAMENTAL BIAS: BULLISH
1. Monetary Policy
The Jan FOMC decision was hawkish on multiple fronts. The statement signalled a March hike as expected, but Chair Powell portrayed a very hawkish tone. Even though Powell said they can’t predict the rate path with certainty, he stressed the economy is in much better shape compared to the 2015 cycle and that...
AUD
FUNDAMENTAL BIAS: NEUTRAL
1. Monetary Policy
At their Feb meeting the RBA delivered on expectations by announcing an end to QE purchases, and also upgrading inflation and employment forecasts. These were seen as hawkish developments, but the bank tried as hard as possible to still keep up a dovish impression by saying the ceasing of QE does not imply...
NZD
FUNDAMENTAL BIAS: NEUTRAL
1. Monetary Policy
The RBNZ underwhelmed some market participants who were looking for a 50bsp hike at their last policy meeting and the bank delivered a 25bsp hike as consensus was expecting. Even though the NZD took a plunge after the meeting, we don’t think markets are really giving NZD the upside it deserves after the Nov...
