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Pay Attention when Central Bankers Speak: Bollard killed the New Zealand dollar with one Statement!
By Sean Hyman | April 30, 2009
Yesterday, New Zealand announced interest rates and cut them from 3% down to 2.50% as expected. However, what was not expected were the comments from their central banker (Bollard). He stated that rates would likely remain low “well into late 2010”.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aDysq8mjvOyQ
The main reason many people even trade the New Zealand dollar (NZD) is due to their higher rates that are normally well above anyone elses in the industrialized world. Since he snatched that rug out from under investors….they poured out of the New Zealand dollar.
As a result, AUD/NZD catapulted higher while NZD/USD and NZD/JPY tanked hard. There were literally gaps on these charts. That’s rare on most currency charts (except on Sundays when the market cranks up).
Tip to take from this: Pay attention when central bankers are scheduled to speak and listen to what they say. Because not only will they cause an immediate reaction in their currency but they can also set the “tone” for the currency for the months to year ahead! Click on the chart to enlarge it.
Sean Hyman
noneTopics: What To Look At In The Market |