US rates remain on hold after the FOMC met overnight. The Fed left the rate range unchanged at 0.25% and 0.50% as expected, however dialogue appeared on the dovish side. Declines in oil prices continue to have a transitory impact on inflation as low energy and non-energy imports further the downward pressure. The path of fed rates will depend on the economic outlook as informed by incoming data. US equities responded poorly to market pressure and FOMC dovish tones with the DJIA and S&P500 are closing down 1.38% and 1.09% respectively. European indices ended on a positive note with gains ranging between 1.0% and 1.4%, while the Hangseng and Nikkei closed with gains of 1.02% and 2.72%.
Similar to the FOMC, RBNZ rate changes remain on hold. RBNZ rates remain at 2.5% while leaving the door open for further rate cuts. Falling oil prices and weaker global growth have had a dampening effect on inflation. The NZD has faced downward pressure in part due to soft commodity prices continuing their fall. Fonterra cut milk price forecasts ahead of the RBNZ decision, dropping forecasts to $4.15 down from $4.60 a kg in response to weak international prices. Fonterra Chairman John Wilson has pointed to declining international oil prices and slowing demand from China as they driving factors of this downward trend.
Trading quote of the day: It’s human nature to find patterns where there are none and to find skill where luck is a more likely explanation. William Bernstein
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