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The Peoples Bank of China announced today that it conducted 204 billion yuan of 7-day reverse repurchase operations, with both the bid and winning bids amounting to 204 billion yuan. The operating rate was 1.40%, unchanged from the previous rate.On July 23, the National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) issued a notice regarding the "15th Five-Year Plan for Renewable Energy Development." The notice states that during the 15th Five-Year Plan period, the newly started offshore wind power capacity nationwide will be approximately 100 million kilowatts, reaching a cumulative installed capacity of over 100 million kilowatts by 2030. It also emphasizes the need to coordinate hydropower development with ecological protection, taking into account flood control, water supply, irrigation, and navigation needs, aiming to reach approximately 410 million kilowatts of conventional hydropower capacity nationwide by 2030. Furthermore, it prioritizes the development of distributed renewable energy in central and southern regions, promoting diversified development and intensive spatial utilization across multiple scenarios. During the 15th Five-Year Plan period, the newly installed capacity of distributed renewable energy nationwide will exceed 300 million kilowatts.The Bank of Japan announced that it will directly purchase ¥355 billion of 1-3 year Japanese government bonds, ¥335 billion of 5-10 year Japanese government bonds, and ¥100 billion of 10-25 year Japanese government bonds starting July 24.On July 23, futures market news: The SC crude oil main contract opened slightly higher, rising more than 3% intraday, reaching a new high since June 12. Cinda Futures stated that Wednesdays expectations for easing tensions failed to materialize, with Trump denying recent negotiations with Iran and threatening to expand military action, including a strike on the suspected nuclear facility at Mount Kailash, causing oil prices to record four consecutive days of gains. Currently, the market is still dominated by expectations of supply disruptions. While the Strait of Hormuz remains nominally open, the eleventh consecutive day of attacks continues to disrupt shipping from the Gulf. The Houthi threat to Saudi shipping in the Red Sea remains unresolved, and the Caspian Pipeline Union terminal in the Black Sea has been attacked again, presenting three risks simultaneously. If the attack expands to nuclear facilities, Iran has explicitly stated its intention to retaliate against the entire Gulfs energy infrastructure, thus increasing the risk of supply shortages. It is worth noting that the market has been overbought for several days with crowded positions; if negotiations resume, profit-taking could be equally severe. The EIAs unexpected 1.4 million barrel inventory buildup this week suggests that the near-term supply is not as tight as the premium suggests.On July 23, the National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) issued a notice regarding the "15th Five-Year Plan for Renewable Energy Development." The notice emphasizes promoting the integrated development of offshore wind power, including offshore photovoltaic power and ocean energy. It encourages the integration of offshore wind power with offshore oil and gas, seawater desalination, marine ranching, and seabed computing, and promotes the integrated construction of offshore wind power facilities for marine observation, ecological monitoring, and earthquake monitoring. The notice also explores the construction of offshore energy islands to create new models for the comprehensive development and efficient utilization of green energy at sea.

Forecast for the New Zealand Dollar: NZD/USD Positioned Between RBNZ Rate Hikes and Ukraine Tensions

Daniel Rogers

May 09, 2022 10:33

The emotion-related Despite another volatile week for global stock markets, the New Zealand Dollar moved cautiously higher last week. The Dow Jones and Nasdaq Composite fell approximately 1.5% and 1.1%, respectively, on Wall Street. Europe and Asia likewise did not appear to be in a good position. The FTSE 100, DAX 40, and Nikkei 225 all declined by 1.9%, 2.5%, and 2.1%, respectively.

 

What may account for the disparity between the New Zealand dollar and market sentiment? Will this continue during the upcoming week? A possible cause is the decline in hawkish monetary policy expectations for the Federal Reserve. According to the CME FedWatch Tool, the probability of a 50-basis-point raise in March has decreased to approximately 21 percent from nearly 50 percent a week ago. This contributed to the weakening of the US dollar, strengthening the New Zealand dollar.

 

This was likely caused by geopolitical tensions and less aggressive Federal Reserve language. Next week, all eyes will be on a meeting between the United States and Russia. The former continues to feel that the latter is preparing an assault. Be wary if more Fed policymakers mention Ukraine. John Williams, president of the New York Fed, stated that he did not see a "compelling reason" for a significant hike in the prime rate.

 

On February 23rd, the Reserve Bank of New Zealand will make its first interest rate decision of the year. The central bank is anticipated to increase interest rates to 1.00 percent from 0.75 percent before. This year, overnight index swaps are pricing in nearly seven rate hikes, indicating a potentially aggressive tightening cycle. This implies that the central bank has a great deal of responsibility.

 

The inflation and labor market figures for the fourth quarter of New Zealand surprised to the upside, increasing the argument for an aggressive RBNZ. However, the downside risk for the New Zealand dollar could be greater if the central bank fails to live up to such bold hawkish wagers. This could result in a classic case of "buy the rumor, sell the news."

 

On the other hand, a close examination of the chart below reveals that a majors-based New Zealand Dollar index is struggling to track the rise in local 10-year government bond yields. This is an indication of the RBNZ's rising hawkish policy bets. So perhaps the New Zealand Dollar has some ground to make up. Nonetheless, it is difficult to disregard the detrimental influence of deteriorating market mood. In light of this, the forecast for the NZD in the coming week is neutral.

 

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