Wheeler Boosts NZD
RBNZ Governor Wheeler revealed he intends to press ahead with the development of macro-prudential tools to help prevent house price bubbles and thereby secure financial stability. The New Zealand dollar drew support from news that consultation with the banking sector should begin in March, potentially opening the door to greater control over mortgage lending practices. This follows in the wake of Thursday’s policy statement where concern was expressed over rising house prices and an expansion of mortgage lending. Elsewhere, risk appetite was buffeted by two China PMIs – the official version missed expectations, whereas the better private sector version released 45 minutes later helped repair some of the damage inflicted on sentiment. USDJPY meanwhile continued its advance, rising through 92.00 despite the absence of fresh news. Today’s US labour and ISM reports will be the key calendar events. Our US economists find themselves on the optimistic side of consensus. Strong payrolls growth would very likely be dollar-positive, especially in light of the FOMC’s December decision to express policy guidance explicitly in terms of the unemployment rate. ECB LTRO repayment levels for the current week are also due to be announced at 1100GMT.
Click here to read the full report: UBS Morning Adviser
UBS Investment Bank