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New Zealand bonds end mixed ahead of Q4 employment report, RBNZ’s monetary policy decision

New Zealand government bonds ended Monday’s session on a mixed tone as investors wait to watch the Reserve Bank of New Zealand’s (RBNZ) monetary policy decision, scheduled to be unveiled on February 7 by 20:00GMT, followed by the policy statement and Governor Spencer’s speech at 21:00GMT. Also, the country’s employment report for the fourth-quarter of 2017, due a day will add further direction to the debt market.

At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 2.99 percent, the yield on 20-year also slipped 1 basis point to 3.52 percent while the yield on short-term 2-year ended 1 basis point higher at 1.95 percent.

The Reserve Bank of New Zealand (RBNZ) is expected to again leave the OCR at 1.75 percent at its Monetary Policy Statement next Thursday. The Bank has maintained a watchful stance for some months now. And while it sounded a slightly more upbeat tone in November, a broad spirit of cautiousness has underpinned its assessment for some time. It has been close to three months since the November Monetary Policy Statement, and developments have certainly been mixed since then, Westpac Research reported.

"The RBNZ’s inflation projections will be downgraded again and it is possible that it lowers its near-term GDP forecasts a touch as well given recent signals from business surveys. One could, therefore, make an argument that developments on balance justify the RBNZ tweaking its interest rate projection lower too (and that is the direction we do see the risks pointed), but chances are it is left largely unchanged. With the first hike so far into the future, there is no urgency to take a stand," Westpac Research commented in its recent report.

Meanwhile, the NZX 50 index slumped 2.06 percent at close at 8,241.83, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at -2.63 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest

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February 19 13:00 UTC Released

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