In late afternoon news from the US, Trump signalled he could slap a 25% tariff on imported automobiles, especially targeting those from Europe and Asia (China, Japan and South Korea are notable large exporters of vehicles). A similar tariff could also hit pharmaceuticals and semiconductor chips. Trump indicated these could apply as soon as April 2.

Nothing is solid on this as yet, but it does raise further trade war implication concerns.

Trump also said he may not let Venezuela export oil and petroleum products via firms like Chevron.

The main focus for the session was the Reserve Bank of New Zealand. The Bank cut its cash rate target by 50bp, the third 50bp rate cut in a row. Guidance was dovish, the OCR path indicating a further cut by 50bps by mid-this year. This is expected to be two 25bp cuts although ANZ in New Zealand are expecting three 25bp cuts, one each in April, May and July (the next three meetings, the 9th, 28th and 9th respectively).

The New Zealand dollar chopped up and then down after the announcement, settling around lows circa 0.5680 for a half hour or so before surging back to record a new high for the session above 0.5720. There is more on the RBNZ in the points above.

AUD/USD followed the NZD higher.

From Japan we had comments from Bank of Japan policy board member Takata. He said (in brief) that Japan's real interest rates remain deeply negative and are still accommodative, but:

  • the Bank must adjust degree of monetary support further if economy moves in line with its forecasts,
  • the Bank must gradually shift policy to avoid upside price risks from materialising.

USD/JPY is not really net changed much at all on the day, but it did pop briefly to just over 152.30 before coming back to lows circa 151.80.

From China we had January home price data. New home prices recorded their 20th straight m/m % drop. 2nd hand home prices hit 21 straight falls.

Silver fell circa 1%.

nzd RBNZ rate cut wrap 19 February 2025 2
Source: Forex Live