Major currencies and dollar
New Zealand and Australian dollars are at six-year lows with RBNZ likely to slash rates and RBA to add to its dovish toneReuters

All eyes are on the Reserve Bank of New Zealand, the only G10 central bank in the list of rate setters in the coming week, as renewed downside pressure on crude prices has become a catalyst to cut rates further there.

The emerging market central banks in the rate decision calendar for the 19-25 July week are of South Africa, Turkey and Nigeria.

Of them, the South African apex bank will be more in focus as accelerating inflation could force the bank to increase rates despite downside risks to growth.

Other major central banks in focus are the Bank of England, the Bank of Japan and the Reserve Bank of Australia as they are scheduled to release the minutes of their latest policy decision meetings.

Of them, the BoE and the RBA will be more in the limelight with their chiefs among the central bank speakers this week. Both BoE governor Mark Carney and RBA chief Glenn Stevens will be on tape on Wednesday (22 July).

The RBNZ rate decision will be out at 21:00 GMT on Wednesday. The BoE minutes will be released earlier in the day at 8:30 GMT and the RBA minutes a day before (Tuesday) at 1:30 GMT.

New Zealand

With the economy reeling under several headwinds to growth and inflation, the RBNZ has already entered an easing cycle with the June review.

The 11 June cut of 25 basis points that has taken the official cash rate (OCR) to 3.25% was the first rate cut since March 2011. That time, the RBNZ had a 50 basis point cut, taking the OCR to 2.5%.

The NZ central bank held the rate there until March last year when it started raising rates. With four consecutive months of 25 basis points increase, the policy rate was taken to 3.5% by July from where the down move has just begun.

"Headwinds to growth include a softening in the Chinese and Australian economies, a sharp fall in dairy incomes and the persistence of the New Zealand dollar at unjustifiable and unsustainable levels," RBNZ said in its Statement of Intent published on 26 June.

The bank noted that lower fuel prices, a high exchange rate and low global inflation led to the annual CPI inflation falling below the Reserve Bank's 1 to 3% inflation target in the past year.

"The odds of further monetary easing from the Reserve Bank of New Zealand had increased considerably as weak underlying inflation gives Governor Wheeler room to support further the Kiwi economy," said Arnaud Masset of Swissquote Bank in a note.

The marginal rise in headline inflation (from 0.1% year-on-year in Q4 to 0.3%) in the first quarter of this year was aided by a near 9% upward correction in petrol prices, Masset noted, and added the Iran deal will therefore exert more downward pressure on the NZ inflation rate.

"The recent deal between Iran and western powers about Iran's nuclear programme will add more pressure on crude oil prices as the market is expected to experience a glut and it would therefore drag inflation back to zero in the third quarter," Masset said.

Minutes

Among the three, the BoE minutes will be of more importance as the central bank chief recently surprised the markets stating that the UK rate increase time was inching closer.

Carney's comments helped the pound to snap a three-week losing streak and move off a one-month low of 1.5330 against the dollar last week. The GBP/USD was thus taken to a two-week high on 1.5650.

RBA details will show how deep are the concerns of policymakers about the Chinese stock market slump and the renewed downside pressure on commodity prices.

Emerging market rate setters

The South African Reserve Bank may be in the news as it has already hinted that there could soon be a rate increase to curb inflationary pressures.

The benchmark interest rate the Brics group nation is 5.75%, and if an increase materialises this week, it could be of 25 basis points margin. The SARB meeting is on 21-23 July and the announcement will be at the end of the meeting.

South Africa's inflation data on Wednesday will therefore, be keenly watched.

Turkey has its main rate at 7.5% and Nigeria has it at 13%. The former, which had the benchmark rate at 8.25% at the end of last year, is on an easing cycle whereas the latter is on a tightening mode. Nigeria had its main rate at 12% at the end of 2014.