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The NZD opens at 0.7302 (Mid-rate) this morning.
The lack of outright movement since yesterday belies the fact that it was actually a relatively volatile day. The Kiwi broke through 0.7300, trading to a high of 0.7331 before getting knocked back to 0.7244.
Data out of the US came in fairly mixed, but fears of the US Government shutdown, although unlikely, have kept the USDâ€™s recent run of weakness going.
It is a pretty quiet weekend from a data perspective, with the volatile UK Retail Sales being the only major data of note to come out. You can expect it to miss expectations.
Wellington celebrates its Anniversary day on Monday, so although we cannot settle anything NZD related on Monday the 22nd, there will be no interruption to any other currencies or dealing.
Global equity markets are mixed - Dow -0.39%, S&P 500 -0.15%, FTSE -0.32%, DAX +0.74%, CAC +.02%, Nikkei -0.44%, Shanghai +0.87%.
Gold prices are down half a percent to $1,327 an ounce. WTI Crude Oil prices are virtually flat, trading at $64.00 a barrel.
The NZDUSD opens at 0.7314 (mid-rate) this morning.
The NZD came under pressure yesterday afternoon following the release of the ANZ commodity price index result for December. The index fell for the third month in succession, down 2.2% from November, with a 5.6% fall in dairy prices leading the way. The mover lower proved to be short-lived, with the NZD rebounding strongly against the USD as London and Europe entered the market.
US industrial production increased more than expected in December, with the Federal Reserve reporting industrial production surged 0.9% after edging down by 0.1% in November. Economists had forecast a 0.4% increase.
As mentioned in yesterday morningâ€™s report the bank of Canada hiked its cash rate by 0.25% to a rate of 1.25%, the hike was all but priced in with the CAD showing little reaction to the announcement. The increase in the cash rate was the third since July 2017.
Crypto currencies have extended their sharp fall overnight, the news that South Korea and China are planning a crackdown on the digital currency market has seen the bitcoin price plummet below USD10k from its USD20k peak in December.
During our trading day Australiaâ€™s monthly employment report will dictate direction for the NZDAUD cross rate, while overnight tonight Chinaâ€™s quarterly GDP data release should prove to be the highlight.
Global equity markets are mixed - Dow +0.73%, S&P 500 +0.53, FTSE -0.39%, DAX -0.47%, CAC -0.36%, Nikkei -0.35%, Shanghai +0.24%.
Gold prices are little changed $1,335 an ounce. WTI Crude Oilprices are up 0.6% trading at $63.93 a barrel.
The NZDUSD opens at 0.7273 (mid-rate) this morning.
The NZD has edged lower overnight failing to capitalise on this morningâ€™s Global Dairy Trade (GDT) auction result.
The second GDT auction of the New Year has seen the index increase by 4.9% following on from the 2.2% rise at the Jan 2ndevent. There were substantial increases in the Butter, Skim milk powder (SMP) and Whole milk powder (WMP) indexâ€™s which were all up more by than 5%. New Zealand dairy farmers will be pleased to see whole milk powder prices back above USD 3,000 a tonne with this morningâ€™s average selling price hitting USD 3,010 a tonne.
UK inflation eased for the first time in 6 months during December, with last nightâ€™s Office for National Statistics report showing inflation edged down to 3% from Novemberâ€™s 3.1% reading. Consumer prices increased by 0.4%, as expected for the month, while core inflation which excludes energy, food, alcoholic beverages and tobacco, dipped further than forecast, slowing to 2.5% in December down from 2.7% in November and just shy of the forecast 2.6% result.
Overnight, tonight and on the back of unexpectedly strong employment data and rising inflation the Bank of Canada are widely tipped to raise rates by a quarter-point, from 1.0% â€“ 1.25%. The last time the benchmark rate was above 1.0% was back in December 2008.
Global equity markets with the exception of the FTSE are trading higher - Dow +0.64%, S&P 500 +0.25, FTSE -0.17%, DAX +0.35%, CAC +0.07%, Nikkei +1.00%, Shanghai +0.77%.
Gold prices are down 0.4% to $1,334 an ounce. WTI Crude Oilprices have pulled back overnight, down 1.6% trading at $63.53 a barrel.
The NZDUSD opens at 0.7305 (mid-rate) this morning.
The US dollar index slumped to a 3-year low overnight helping the NZD break up through 73 US cents for the first time since our election stalemate.
Both the NZD and AUD are benefiting from a strengthening CNY with the USDCNY cross rate setting a new 20-month low of 6.4189 following last weekâ€™s better than expected Chinese trade and inflation data.
The EUR has climbed to its highest level against the USD since December 2014, with investors hoping that a coalition between Angela Merkelâ€™s conservative bloc and the Social Democrats will be finalised this week.
The key drivers for the NZD over the next 24 hours are this morningâ€™s business confidence report and tonightâ€™s GDT auction.
Global equity markets have edged lower - Dow Closed%, S&P 500 Closed, FTSE -0.12%, DAX -0.34%, CAC -0.13%, Nikkei +0.26%, Shanghai -0.54%.
Gold prices are little changed up 0.1% to $1,340 an ounce. WTI Crude Oil prices continue to push higher, up 0.6% trading at $64.59 a barrel.
The NZDUSD opens at 0.7251 (mid-rate) this morning.
The EUR and GBP were the big movers on Friday, with both currencies surging higher as the USD continued to struggle.
Friday's US inflation data fell short of economistsâ€™ estimates with the Labor Department report showing the consumer price index nudged up by 0.1% in December following on from a 0.4% increase in November. Economists had expected prices to rise by 0.2%. US retail sales for the same period increased in line with expectations rising by 0.4% following an upwardly revised 0.9% increase in November.
The EUR received a further boost on Friday evening after it was reported that German politicians had reached a breakthrough in talks and were close to forming a new c oalition government.
The only domestic economic data of note during the week ahead is Wednesday morningâ€™s global dairy trade auction, with farmers hoping for a further increase in prices following the slight rise recorded at the previous event.
Global equity markets with the exception of the Nikkei rallied on Friday, - Dow +0.89%, S&P 500 +0.67%, FTSE +0.20%, DAX +0.32%, CAC +0.52%, Nikkei -0.24%, Shanghai +0.10%.
Gold prices extended their weekly gains on Friday, up 1.2% closing out the week at $1,338 an ounce, WTI Crude Oil prices held steady on Friday, closing out the week $64.23 a barrel for a weekly gain of 5.7%.
The NZDUSD opens higher at 0.7248 this morning.
The NZDUSD rose to 3 1/2 month highs as the USD weakened overnight after data showed US producer prices fell for the first time in 18 months, causing concern inflation, and hence interest rate hikes, may be constrained.
The USD also suffered as the EUR jumped higher on expectations the European Central Bank policy makers are preparing to scale back their massive monetary stimulus programme as the euro-zone economy strengthens.
Oil prices continued to make gains as production cuts and increasing demand has gradually reduced the global surplus.
Australiaâ€™s November retail sales numbers were surprisingly strong. The figures received a boost from sales of the new iPhone X and Black Friday sales.
NZ building consents will be released at 10:45am
Global equity markets were mixed on the day â€“ Dow +0.6%, S&P500 -0.1%, FTSE +0.2%, DAX -1.0%, CAC -0.3%, Nikkei -0.3%, Shanghai +0.1%.
Gold prices rose 0.2% to USD$1,322 an ounce, a 4-month high. Oil prices (WTI) jumped 1.1% to USD$64.25 per barrel.
The NZDUSD opens at 0.7165 (mid-rate) this morning. The AUDUSD opens at 0.7868 (mid-rate) this morning.
Economic data releases over the next 24 hours.
AUD - 11:30 - AIG Construction Index
USD - 06:40 - FOMC Member Bostic Speaks-07:35 - FOMC Member Williams Speaks
EUR - 21:00 - Retail Sales m/m
Global equity markets continued to push higher on Friday, - Dow +0.88%, S&P 500 +0.70%, FTSE +0.37%, DAX +1.16%, CAC +1.05%, Nikkei +0.89%, Shanghai +0.18%
Gold prices were unchanged on Friday closing out the week at $1,319 an ounce. WTI Crude Oil prices fell 0.7% on Friday closing out the week at $61.41 a barrel.
The NZDUSD opens at 0.6977 (mid-rate) this morning.
Although Trump passed the US Tax bill, there has been little follow through to the USD as there was nothing in the detail to surprise markets.
Economic data releases over the next 24 hours.
NZD - 10:45 amâ€“ GDP q/q
CAD - 2:30 am â€“ CPI m/m, Core Retail Sales m/m
USD - 2:30 am â€“ Final GDP q/q
Global equity markets are mixed, Dow -0.1%, S&P 500 -0.0%, FTSE -0.3%, DAX -1.1%, CAC -0.6%, Nikkei +0.1%, Shanghai -0.3%
Gold prices have drifted higher, up 0.8% to $1,269 an ounce. WTI Crude Oil prices are also up, trading at $58.09 a barrel.
The NZDUSD opens at 0.7008 (mid-rate) this morning.
Today 13:00 - ANZ Business Confidence
Today 11:30 - AUS Monetary Policy Meeting Minutes
Wednesday Morning - GDT Price Index
Wednesday 10:45 - Current Account - Trade Balance
Thursday 10:45 - GDP q/q
Global equity markets have had a strong start to the week, - Dow +0.02%, S&P 500 +0.02%, FTSE +0.62%, DAX +1.59%, CAC +1.33%, Nikkei +1.55%, Shanghai +0.05%.
Gold prices have edged higher, up 0.6% to $1,262 an ounce. WTI Crude Oil prices are little changed trading at $57.39 a barrel.
The NZDUSD opens at 0.6995 (mid-rate) this morning.
From today through to the 15th January the morning updates will be switching to our reduced holiday format.
Domestic drivers for the NZD over the course of this week
Tuesday 13:00 - ANZ Business Confidence
Wednesday Morning - GDT Price Index
Wednesday 10:45 - Current Account - Trade Balance
Thursday 10:45 - GDP q/q
Global equity markets closed out the week mixed, - Dow +0.58%, S&P 500 +0.89%, FTSE +0.57%, DAX +0.27%, CAC -0.15%, Nikkei -0.62%, Shanghai -0.80%.
Gold prices were unchanged on Friday closing out the week at $1,255 an ounce, WTI Crude Oil prices pushed higher on Friday, up 1.0% closing out the week $57.33 a barrel.
The NZDUSD opens at 0.7005 (mid-rate) this morning.
Although the NZD rallied initially after the U.S. Fed hiked rates 0.25% to 1.5% yesterday at 8am, the Kiwi failed to kick on overnight and starts this morning only a fraction higher against the USD, steady with the EUR and lower against the other majors.
Bank of England policy makers left interest rates unchanged at 0.5% overnight, moving into a holding pattern after November saw their first hike in a decade. The Monetary Policy Committee reiterated that â€œfurther modest increasesâ€ in the key rate would probably be needed over the next few years if the economy performed as expected, without providing additional detail on the timing.
As expected, there was little surprise in the ECB monetary policy decision, which kept all three key ECB rates unchanged. â€œThe interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectivelyâ€. The ECB announced that rates will "remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases." As it unveiled before, QE will run at â‚¬30BN per month from January 2018 until the end of September â€œor beyond, if necessary.
The Swiss National Bank (SNB) is maintaining its expansionary monetary policy, with the aim of stabilising price developments and supporting economic activity. Interest on sight deposits at the SNB is to remain at â€“0.75% and the target range for the three-month Libor is unchanged at between â€“1.25% and â€“0.25%.
In the week ending December 9, the advance figure for U.S. seasonally adjusted Initial Claims was 225,000, a decrease of 11,000 from the previous week's unrevised level of 236,000. The 4-week moving average was 234,750, a decrease of 6,750 from the previous week's unrevised average of 241,500.
U.S. retail sales increased more than expected in Novemberas the holiday shopping season got off to a brisk start, pointing to sustained strength in the economy. U.S. Retail Sales rose 0.8% last month. Data for October was revised to show sales gaining 0.5% instead of the previously reported 0.2% rise. Economists polled by Reuters had forecast retail sales increasing 0.3% in November.
UK Retail Sales rose 1.1% in November, well ahead of the 0.4% market expectation and 0.5% increase from October.
Global equity markets are lower: Dow -0.08%, S&P 500 -0.12%, FTSE -0.65%, DAX -0.44%, CAC -0.78%, Nikkei -0.28%, Shanghai -0.32%.
Gold prices have rebounded $10 or 0.8% to $1,255 an ounce.WTI Crude Oil prices are modestly higher 0.1% trading at $56.79 a barrel.
The NZDUSD opens at 0.6991 (mid-rate) this morning.
The UK Office for National Statistics employment report showed unemployment remained at its lowest level since the March to May quarter of 1975. The unemployment rate has spent the last two quarters from May through to October at 4.3%. The reading was in line with expectations.
Direction will obviously be driven by this morningâ€™s announcement, with a hike fully priced in it will be the Fedâ€™s forecast on future hikes that will dictate USD direction.
Global equity markets remain mixed - Dow +0.56%, S&P 500 +0.28%, FTSE -0.05%, DAX -0.44%, CAC -0.51%, Nikkei -0.47%, Shanghai +0.68%.
Gold prices have retraced yesterdayâ€™s fall up 0.6% to $1,245 an ounce. WTI Crude Oil prices have slipped lower, down 1.2% trading at $56.71 a barrel.
The US Federal Reserve Open Market Committee (FOMC) raises interest rates (Fed Funds) by 0.25% to a range between 1.25-1.50%. This was widely expected. The NZDUSD is higher in immediate response.
The NZDUSD opens at 0.6926 (mid-rate) this morning.
The NZD has edged higher against the majors with the EUR the worst performing currency after Germany's economic sentiment weakened more-than-expected in December.
According to the latest ZEW Indicator of Economic Sentiment, sentiment fell 1.3pts to 17.4 in December following Novemberâ€™s 18.7 reading. The index had been expected to decline by 0.8pts. It is worth noting the long term average for the indicator is 23.7.
UK inflation unexpectedly increased in November rising to 3.1%, its highest level since March 2012. Economists had expected inflation to remain unchanged from Octoberâ€™s 3% reading. Core inflation which excludes energy, food, alcoholic beverages and tobacco, remained unchanged at 2.7%.
US producer prices increased slightly more than expected in November with the Labour Department report showing the producer price index rose by 0.4% equalling the September and October increases and ahead of the expected 0.3% rise.
Overnight tonight the US monthly inflation data will play second fiddle to tomorrow morningâ€™s Federal Reserve monetary policy statement. The Fed are widely expected to hike benchmark rate by a quarter point to 1.5% and will also publish their updated 'dot plot' projections of the Federal Funds rate for the next 24 months.
Global equity markets remain mixed - Dow +0.56%, S&P 500 +0.31%, FTSE +0.63%, DAX +0.46%, CAC +0.66%, Nikkei -0.32%, Shanghai -1.25%.
Gold prices have edged lower, down 0.7% to $1,238 an ounce. WTI Crude Oil prices have given back yesterdayâ€™s gains, down 0.9% trading at $57.41 a barrel.
The NZDUSD opens at 0.6916 (mid-rate) this morning.
The NZD has been the strongest performing of the G10 currencies. The NZD rallied following the announcement that Adrian Orr has been appointed as the Reserve Bank Governor effective from 27 March 2018. Mr Orr the current CEO of the New Zealand Superannuation Fund and former Deputy Governor and Head of Financial Stability at the Reserve Bank has been appointed for a five-year term at the completion of Acting Governor Grant Spencer's term.
New Zealand credit card spending for the month of November printed ahead of forecasts with yesterday's report showing spending increased a seasonally adjusted 1.4% in November following an upwardly revised 0.7% rise in October. Economists had forecast card spending to climb by 0.76% from the previously reported 0.4% increase in October.
Global equity markets are mixed - Dow +0.12%, S&P 500 +0.20%, FTSE +0.80%, DAX -0.23%, CAC -0.23%, Nikkei +0.56%, Shanghai +0.98%.
Gold prices are unchanged trading at $1,247 an ounce. WTI Crude Oil prices have continue to rise, up 0.9%%, trading at $57.95 a barrel.
The NZDUSD opens at 0.6881 (mid-rate) this morning.
The NZD is tracking higher this morning, as is in fact the best performing G10 currency over the past 24 hours.
The NZD rallied yesterday afternoon after interim Reserve Bank Governor Grant Spencer said the central bank is adopting a more flexible approach to inflation and that "It may be appropriate for monetary policy to put relatively more weight on output, employment and financial stability relative to inflation."
This morningâ€™s Global Dairy Trade (GDT) auction broke its recent downward trend, with the price index nudging up by 0.4% following four consecutive decreases. Whole milk power (WMP) and skimmed milk powder (SMP) prices both improved up 1.7% and 4.7% respectively, while the big surprise was an 11.1% fall in the butter index. Overall volumes were down with 29,514 tonnes selling under the hammer, down from 35,000 tonnes at the previous auction on 21 Nov.
Although Euro-zone private sector growth accelerated in line with expectations, the EUR slipped lower on the news that German services activity slowed more than expected in November. After an initial reading of 54.9 economists had expected the index to fall to 54.7, slightly better than this last nightâ€™s final reading of 54.3.
The UK service sector growth in November pulled back from a six month high in October with the index dipping to 53.8, down from 55.6 and below economistâ€™s forecasts of a 55.0 reading.
A larger than expected decrease by the US non-manufacturing index has had little effect on the dollar. This morning the Institute for Supply Management reported the index fell to 57.4 in November, down from 60.1 in October and below the forecast 59.0 reading.
Global equity markets are slightly down - Dow -0.15%, S&P 500 +0.15%, FTSE -0.16%, DAX -0.08%, CAC -0.26%, Nikkei -0.37%, Shanghai -0.18%.
Gold prices are down 0.8% trading at $1,273 an ounce. WTI Crude Oil prices have edged lower, down 0.4%, trading at $57.54 a barrel.
The NZDUSD opens at 0.6844 (mid-rate) this morning.
The NZD has struggled overnight, losing ground against all its rivals. This afternoon RBNZ acting Governor Grant Spencer is due to give a speech titled â€˜low inflation and its implications for monetary policy,â€™ and is widely expected to reiterate â€˜monetary policy will remain accommodative for a considerable periodâ€™. Investors will also be very mindful of tonightâ€™s Global Dairy Trade (GDT) auction. The price index has suffered four consecutive falls with the last auction, which was held on Nov 21st, down 3.4% following 3.5%, 1% and 2.4% decreases at the three previous auctions.
Overnight US Commerce department reported factory orders edged lower in October, down 0.1% following Septemberâ€™s 1.7% spike in orders. The fall was not as great as expected, with economists forecasting orders to fall by 0.4%.
The British pound continues to be the most actively traded currency with Brexit negotiations continuing to dominate the headlines. The GBP surged higher overnight on reports that an agreement between Britain and the EU was close before news broke that Northern Irelandâ€™s Democratic Unionist party, which provides the UK prime minister with her majority in parliament, objected to the proposed solution for the Irish border.
Global equity markets remain mixed - Dow +087%, S&P 500 +0.52%, FTSE +0.53%, DAX +1.53%, CAC +1.36%, Nikkei -0.49%, Shanghai -0.24%.
Gold prices are down 0.7% trading at $1,273 an ounce. WTI Crude Oil prices are down 1%, over the past 24 hours, currently trading at $57.79 a barrel.
The NZDUSD opens at 0.6872 (mid-rate) this morning.
Markets were rocked on Friday by news that the former US National Security Adviser Michael Flynn had pled guilty to lying to the FBI, and that he is cooperating with prosecutors in the investigation of Russian meddling in last year's presidential election. The USD along with US equities, which were on the rise after Senate Majority Leader Mitch McConnell announced that GOP leaders had enough votes to pass the new tax reform bill, quickly reversed.
Saturdayâ€™s scheduled US economic data releases were mixed with construction spending for the month of October printing well ahead of expectations, surging by 1.4% (exp +0.5%), while the purchasing managers index for the month of November edged down to 58.2 from 58.7 in October. Economists had expected the index to pull back to 58.4.
The CAD was the strongest performing of the G10 currencies on Friday, benefitting from an increase in oil prices along with better than forecast GDP and employment data releases. After edging down 0.1% in August gross domestic product increased by 0.2% in September, while Novemberâ€™s labour force survey reported employment increased by 79k jobs, with unemployment falling to 5.9% from Octobers 6.3% reading.
The main domestic driver for the NZD this week will be Tuesdayevening's GDT auction.
Global equity markets closed out the week mixed, - Dow -0.17%, S&P 500 -0.20%, FTSE -0.36%, DAX -1.25%, CAC -1.04%, Nikkei +0.41%, Shanghai +0.01%.
Gold prices edged higher on Friday, up 0.4% closing out the week at $1,282 an ounce, WTI Crude Oil prices surged higher on Friday, up 1.7% closing out the week $58.36 a barrel.
The NZDUSD opens lower at 0.6833 this morning.
The NZDUSD fell sharply yesterday after Business Confidence figures plunged to an 8-year low. The change and structure of the new Government was mentioned as the primary catalyst for the drop.
The EURUSD and GBPUSD were both pushed higher as the USD weakened. Month-end currency adjustments by investors and portfolio managers resulted in USD selling pressure.
The GBP performed well on optimism of a Brexit deal between the UK and the European Union could be reached at a summit next month. The NZDGBP dropped to a low of 0.5050 - a level last seen in June 2016.
For Bitcoin watchers, the cryptocurrency fell 8% as low as USD$9000 yesterday, having touched an all-time high of USD$11,395 the previous day. It is currently trading at USD$9,900.
NZ Overseas Trade Index will be released at 10:45am today.
Global equity markets were mixed on the day â€“ Dow +1.32%, S&P500 +0.85%, FTSE -1.1%, DAX -0.3%, CAC -0.5%, Nikkei +0.6%, Shanghai -0.6%,
Gold prices are lower at USD$1,274 an ounce. Oil prices (WTI) decreased to USD$57.14 per barrel.
The NZDUSD opens at 0.6891 (mid-rate) this morning.
The NZD drifted lower following the release of the RBNZ financial stability report, those hoping for a road map outlining the full removal of the LVRâ€™s were left disappointed after RBNZ announced a modest easing of the LVR restrictions, from 1 January 2018, with the bank to monitor the impact of these changes before making further adjustments.
The British pound is again the strongest performing G10 currency after rumours that a preliminary agreement on a divorce settlement were confirmed. The financial settlement is the first of three areas which need to be agreed, with the rights of EU citizens in the UK after Brexit, and how to avoid a hard border between Northern Ireland and the Irish Republic, the other two key matters to be negotiated.
The USD received a boost after the Commerce Department reported Q3 gross domestic product surged up by an upwardly revised 3.3% from the previously reported 3.0% rise. The final reading had been forecast to increase to 3.2%.
Euro-zone economic confidence continues to improve, with the index reading for the month of November reaching a 17 year high of 114.6 following a 114.1 result in October.
Global equity markets are mixed - Dow +0.22%, S&P 500 -0.24%, FTSE -0.90%, DAX +0.02%, CAC +0.14%, Nikkei +0.49%, Shanghai +0.13%.
Gold prices are down 0.8% currently trading at $1,295 an ounce. WTI Crude Oil prices continue to slide, down 0.8%, trading at $57.37 a barrel.
The NZDUSD opens at 0.6875 (mid-rate) this morning.
Talk of a renewed coalition between Chancellor Angela Merkel's CDU/CSU conservatives and the centre-left Social Democrats along with strengthening German business confidence has seen the EUR surge higher.
The Social Democrats who had vowed to go into opposition following the September general election appeared to do a U-turn on Friday with SPD chief Martin Schulz announcing he was ready to enter talks with Angela Merkel's CDU/CSU conservatives in the hopes of forming an alliance.
Germany's business confidence strengthened to a new record high in November with the index peaking at 117.5 following on from an upwardly revised 116.8 in October. The index was expected to remain unchanged from Octoberâ€™s previously reported 116.7 reading.
As we enter month end the domestic driver for the NZD will be Wednesdayâ€™s RBNZ financial stability report followed by RBNZ Governor Grant Spencerâ€™s testimony to the Parliament Select Committee.
Global equity markets with the exception of the FTSE inched higher on Friday, - Dow +0.14%, S&P 500 +0.21%, FTSE -0.10%, DAX +0.39%, CAC +0.20%, Nikkei +0.12%, Shanghai +0.06%.
Gold prices edged lower on Friday, down 0.3% closing out the week at $1,287 an ounce, WTI Crude Oil prices were up 0.7% on Friday, hitting a new 2 year high of $58.95 a barrel.
The NZDUSD opens higher at 0.6888 this morning.
A quiet night in the financial markets as the US Banks were closed in observance of Thanksgiving Day. The NZDUSD has traded a 110 point or 1.6% range this week, with the Kiwi trending higher, all four days.
The Eurozone economy is showing signs of picking up momentum in the fourth quarter, with multi-year highs seen for all main indicators of output, demand, employment and inflation in November. Business activity and prices rose at the steepest rates for over six years, while the largest accumulation of uncompleted work for over a decade encouraged firms to take on staff at a rate not seen for 17 years.
The Eurozone headline IHS Markit Eurozone PMI rose to 57.5 in November, according to the â€˜flashâ€™ estimate (based on approximately 85% of final replies), up from 56.0 in October and its highest since April 2011.
Economic growth in Germany accelerated in November,driven by a pick-up in performance in the manufacturing sector, according to flash PMI survey. The Index was 57.6 for November up from 56.6 in October. German Final GDP was 0.8% quarter on quarter and was as expected.
French Manufacturing flash PMI was 57.5 in November up from 56.1 in October and was better than the 55.9 fall expected. French Flash Services PMI was also ahead of expectation of 57.1 in November. The index was 60.2 up from 57.3 in October.
Canadian Retail sales edged up 0.1% to $49.1 billion in September. Higher sales at gasoline stations, particularly due to higher prices which were largely due to supply disruptions caused by Hurricane Harvey, were the main contributor to the gain. Excluding sales in this subsector, retail sales declined 0.2%. Sales were up in 5 of 11 subsectors, representing 52% of retail trade. In volume terms, sales at gasoline stations declined 2.5%.
Canadian Core Retail Sales after decreasing 2.5% in August, sales at food and beverage stores were up 0.3% in September. The main contributors to the gain were convenience (+3.7%) and supermarkets and other grocery (+0.3%) stores.
UK gross domestic product (GDP) in volume terms was estimated to have increased by 0.4% between Q2 and Q3 2017, unrevised from the preliminary estimate of GDP. Services remained the strongest contributor to GDP growth in Q3 2017, with the components of the output approach broadly unrevised from the preliminary estimate. The rate of growth in household final consumption expenditure strengthened to 0.6% between Q2 and Q3 2017
Global equity markets are mixed: Dow and S&P500 closed, FTSE -0.02%, DAX -0.05%, CAC +0.5%, Nikkei +0.5%, Shanghai -2.29%
Gold prices are down $2 or 0.2% at USD$1,291 an ounce. Oil prices (WTI) rose 0.9% currently trading at $58.55 a barrel.
The NZDUSD opens higher at 0.6884 this morning.
The NZDUSD moved higher this morning after the release of the latest US Federal Reserve Monetary Policy Meeting Minutes. Many Fed officials saw a rate increase near-term, however many were concerned about weakening inflation and when it would rebound. Nearly all officials supported a gradual approach to raising interest rate â€“ the market is almost universally expecting the Fed to raise interest rates again on 14thDecember (NZ time)
The USD weakened a little overnight after the release of weaker than expected US economic data â€“ US Durable Goods Orders came in well short of forecasts, long-term Inflation expectations declined, however Consumer Sentiment was a little better than anticipated.
NZ Retail Sales numbers hit the tapes at 10:45am today.
It is US Thanksgiving holiday today â€“ consequently, there are no settlements possible today.
Global equity markets were mixed on the day â€“ Dow -0.3%, S&P500 -0.1%, FTSE +0.1%, DAX -1.2%, CAC -0.3%, Nikkei +0.5%, Shanghai +0.6%
Gold prices are higher at USD$1,293.90 an ounce. Oil prices (WTI) increased to USD$58.03 per barrel.
The NZDUSD opens at 0.6832 (mid-rate) this morning.
Surprisingly, and following a fourth consecutive fall in dairy prices the NZD along with the AUD have outperformed all their major rivals.
The fall in global dairy prices continued this morning with the overall index price down 3.4%. Both whole and skimmed milk prices contributed to the overall fall with WMP prices down 2.7% and SMP prices plummeting 6.5%. The last increase in the index was back on September 19 when it increased by 0.9%.
The AUD outperformed after RBA Governor Philip Lowe hinted that although no interest rate move is forecast in the near term the next change to the OCR in Australia could result in a hike. Gov Lowe stated 'If the economy continues to improve as expected, it is more likely that the next move in interest rates will be up, rather than down'.
US existing home sales exceeded economistsâ€™ forecasts surging by 2% to an annual rate of 5.48m in October, well ahead of the expected 0.7% increase. At the same time Septembers previously reported result was downwardly revised 5.37m from 5.39m.
This morningâ€™s visitor arrivals data is likely to have little effect on the currency as investors look to tomorrows FOMC minutes and NZâ€™s quarterly retail sales report for direction.
Global equity markets have continued to push higher- Dow +0.77%, S&P 500 +0.66%, FTSE +0.30%, DAX +0.83%, CAC +0.48%, Nikkei +0.70%, Shanghai +0.53%.
Gold prices are down little changed at $1,281 an ounce. WTI Crude Oil prices have pushed up 1.2%, currently trading at $56.71 a barrel.
The NZDUSD opens at 0.6807 (mid-rate) this morning.
The NZD has inched up against all its rivals with the exception of the GBP which continues to outperform on news that the UK are preparing to sign off on a Â£40b divorce bill with Brussels.
Overnight the US leading economic index spiked higher in October with the Conference Board reporting the index surged up by 1.2% well ahead of the forecast 0.6% rise. It is the third consecutive increase in the index following Septemberâ€™s 0.1% and Augustâ€™s 0.4% increases.
The EUR has managed to recover most of yesterday afternoonâ€™s losses overnight. A breakdown in talks between Merkel's conservatives, the liberal Free Democrats (FDP) and Greens saw the currency decline against all its rivals during the Asian trading session.
This morning at a hearing of the European Parliament's economic and monetary affairs committee in Brussels, ECB President Mario Draghi reiterated that although the Euro-zone's economic recovery remains strong, a lack of inflation remains a concern. At the end of October the ECB confirmed that although they will halve their asset purchases at the start of 2019, they will continue purchasing for another nine months.
Overnight, tonight the latest dairy auction will drive direction for the NZD. Importers will be hoping for an increase in auction prices at tonightâ€™s auction following three consecutive declines in dairy prices.
Global equity markets are broadly higher- Dow +0.36%, S&P 500 +0.15%, FTSE +0.12%, DAX +0.50%, CAC +0.40%, Nikkei -0.60%, Shanghai +0.28%.
Gold prices are down 1.2% trading at $1,277 an ounce. WTI Crude Oil prices have slipped lower, currently down 1.0% trading at $56.01 a barrel.
The NZDUSD opens at 0.6875 (mid-rate) this morning.
Commodity linked currencies including the NZD continue to underperform. The AUD has been the big mover over the past 24 hours, losing ground against all its rivals following yesterdayâ€™s disappointing wage growth data and tumbling iron ore prices.
Australia's wage price index climbed a seasonally adjusted 0.5% in Q3, the result was unchanged from Q2â€™s result and came up short of the forecast 0.7% increase. The AUD fell sharply following the announcement.
Expectations that the Federal Reserve will hike rate at their December 13th meeting increased overnight with US inflation for the month of October printing in line with forecasts and retail sales for the same month unexpectedly increasing. As of this morning a 25 basis point hike by the Fed is all but priced in.
The UK Labour market report helped push the GBP higher with the report showing the unemployment rate remained 4.3% its lowest level since 1975, while for the same quarter the average earnings index rose by 2.2% slightly better than the expected 2.1% rise.
In the absence of any NZ economic data the highlight during our trading day is likely to come from Australiaâ€™s monthly employment report.
Global equity markets continue to slide- Dow -0.37%, S&P 500 -0.36%, FTSE -056%, DAX -0.44%, CAC -0.27%, Nikkei -1.57%, Shanghai -0.79%.
Gold prices are little changed trading at $1,277 an ounce. WTI Crude Oil prices have edged lower, currently down 0.3% trading at $55.36 a barrel.
The NZDUSD opens at 0.6931 (mid-rate) this morning.
The NZD along with other commodity linked currencies edged lower on Friday with very little in the way of economic data to dictate direction.
Helped by better than expected industrial production for the month of September, the GBP was the strongest performer of the G10 currencies. According to the Office for National Statistics industrial production expanded for sixth consecutive month in September, increasing by 0.7% m/m, well ahead of the forecast 0.3% increase, with Augustâ€™s previously reported 0.2% increase upwardly revised to 0.3%.
The latest University of Michigan US consumer sentiment index fell further than expected in November with the index falling to 97.8 following a 100.7 reading in October. Economists had expected a reading of 100.0.
Direction for markets this week will be driven by central bank commentary with bank Governors from Japan, UK, Europe and the US all speaking over the course of the week.
Global equity markets softened on Friday, - Dow -0.17%, S&P 500 -0.08%, FTSE -0.68%, DAX -0.42%, CAC -0.50%, Nikkei -0.82%, Shanghai +0.14%.
Gold prices edged lower on Friday, down 0.8% closing out the week at $1,276 an ounce, WTI Crude Oil prices slipped lower on Friday, trimming last weekâ€™s gains by 1% closing out the week at $56.74 a barrel.
The NZDUSD opens at 0.6963 (mid-rate) this morning.
The RBNZ left the OCR unchanged at a record low of 1.75% yesterday morning and the NZD/USD rallied 0.6% in the hour following the announcement. The RBNZ is in no rush to raise interest rates and maintains a neutral stance though â€˜not firmly neutralâ€™. The RBNZ sees the NZD at fair value, and core inflation would need to pick up to change their current stance.
The NZD/USD has traded a 108 point or 1.57% range this week and begins Friday 16 points or 0.23% from the 0.6979 high set last night.
In the week ending November 4, the advance figure for seasonally adjusted initial claims was 239,000, an increase of 10,000 from the previous week's unrevised level of 229,000. The 4-week moving average was 231,250. The average number of applications filed over the past month was the lowest in 44 years.
Swiss National bank chairman Jordan said the SNB has room to manoeuvre on negative rates if necessary which saw the USD/CHF rates trade from 1.0020 to 0.9920
Key data releases tonight include UK Manufacturing Production and U.S. University of Michigan Consumer Sentiment and Inflation Expectations
Global equity markets are lower except China: Dow -0.77%, S&P 500 -0.75%, FTSE -0.61%, DAX -1.49%, CAC -1.16%, Nikkei -0.20%, Shanghai +0.36%.
Gold prices have steadied, up 0.1% trading at $1,286 an ounce. WTI Crude Oil prices are up 0.5% at $57.31 a barrel.
The NZDUSD opens at 0.6919 (mid-rate) this morning.
Markets have lacked direction and traded tight ranges in the absence of any notable economic data releases. The AUD has been the strongest of the G10 currencies recovering most of its fall following Tuesdayâ€™s RBA monetary policy statement, while the GBP is the worst performing of the G10 currencies weighed down by political uncertainty in the U.K., after the international development secretary Priti Patel came under fire over her undisclosed meetings with Israeli Prime Minister Benjamin Netanyahu.
The USD lost ground against all its major rivals after the Washington Post reported that Senate Republicans are considering the possibility of postponing the implementation of corporate tax cuts until 2019.
This morning the RBNZ are widely expected to keep the OCR unchanged at a record low of 1.75% with investors looking to the accompanying statement and shortly after the press conference for direction. Markets will be keen to hear what the Bank has to say on policy, particularly now with the new government proposing a significant jump in government spending.
Global equity markets remain mixed- Dow -0.05%, S&P 500 -0.05%, FTSE +0.22%, DAX +0.02%, CAC -0.17%, Nikkei -0.10%, Shanghai +0.06%.
Gold prices have bounced back from yesterdayâ€™s fall up 0.8% trading at $1,285 an ounce. WTI Crude Oil prices are little changed at $57.05 a barrel.
The NZDUSD opens at 0.6901 (mid-rate) this morning.
The NZD which has been trading between 0.6850 and 0.6950 against the USD for the past week, and yesterday attempted to break through the topside during our afternoon trading session, suffered a sharp fall back to 0.6900 following a third consecutive fall in global dairy prices.
The latest Global Dairy Trade (GDT) auction resulted in the indexâ€™s largest fall since January when the index fell by 3.9%. This morningâ€™s overall price index fell by 3.5% following on from a 1% fall on October 17 and 2.4% decrease in prices on October 3. Whole milk powder (WMP) suffered the sharpest fall down 5.5% while butter milk powder (BMP) which was not on offer at the previous auction saved the index from an even greater fall when its price spiked 7.2%.
The USD has appreciated on the news that Fed Bank of New York President William Dudley will be retiring in mid next year with his replacement to be appointed before Jan 19. Dudley has always been dovish on monetary policy and it is not sure that his replacement will have the same mind set toward interest rate hikes.
Yesterday afternoon, and in line with market expectations, the Reserve Bank of Australia maintained the cash rate at 1.5%. RBA Gov Philip Lowe highlighted slow wage growth and rising debt levels as major concerns for the Bank. Gov Lowe reiterated that "In underlying terms, inflation is likely to remain low for some time". The AUD has fallen against all its major rivals since the announcement.
This morning's Euro-zone retail sales data release for the month of September came in slightly ahead of economistâ€™s estimates, increasing by 0.7% (exp +0.6%) The increase more than reverses the 0.1% fall in August.
Global equity markets remain mixed- Dow -0.2%, S&P 500 -0.17%, FTSE -0.65%, DAX -0.66%, CAC -0.48%, Nikkei +1.73%, Shanghai +0.75%.
Gold prices have slipped lower, down 0.5% trading at $1,275 an ounce. WTI Crude Oil prices are unchanged at $57.11 a barrel.
The NZDUSD opens at 0.6922 (mid-rate) this morning.
The NZD recovered overnight after initially slipping lower following yesterdayâ€™s inflation expectations data release. The survey conducted by the RBNZ for Q4 proved disappointing with the headline forecast edging down from 2.09% to 2.02%.
A lack of tier one economic data has seen currencies trade tight ranges overnight with the EUR the poorest performer of the G10 currencies amid risk aversion brought about by disappointing earnings reports.
Germany's factory orders unexpectedly increased in September with the Destatis report revealing factory orders increased by 1% following Augustâ€™s 4.1% surge and surprising economists who had forecast orders to decrease by 1.1%. The report revealed that although domestic orders remained the increase was driven once again by offshore demand.
Crude oil prices are now trading at their highest level since July 2015 as Saudi Arabiaâ€™s crown prince Mohammed bin Salman continues with his an anti-corruption crackdown arresting a number of royals, ministers, and investors leading to political instability in the region.
The RBA are widely expected to keep interest rates unchanged for the 15th consecutive month at this afternoonâ€™s monetary policy meeting. The Reserve bank will be disappointed with retail spending slipping into negative territory in the September quarter, and are expected to site rising housing debt and a lack of wage inflation as major risks to the economic outlook.
Global equity markets are mixed- Dow +0.02%, S&P 500 +0.05%, FTSE +0.03%, DAX -0.07%, CAC -0.19%, Nikkei +0.04%, Shanghai +0.49%.
Gold prices have retraced Fridayâ€™s fall, up 0.9% trading at $1,281 an ounce. WTI Crude Oil prices have continue to surge, up 2.6% overnight currently sitting at $57.11 a barrel.
The NZDUSD opens at 0.6911 (mid-rate) this morning.
Currency markets had a quiet close to the week with investors looking to Friday nightâ€™s US economic data releases for direction.
Fridayâ€™s economic data releases sent mixed messages to investors with the latest employment report falling short of economistsâ€™ forecasts while economic activity in the non-manufacturing sector grew at a faster pace anticipated. US non-farm jobs increased by 261k in October with Septemberâ€™s 33k fall in jobs was revised to an 18k rise. Economists had expected an addition of 312k jobs while Septemberâ€™s result was initially reported as a 33k fall in jobs. A fall in the unemployment rate, down to 4.1% from 4.2% in September was largely due to a 765k fall in people looking for work.
The Institute for Supply Management reported its non-manufacturing index edged up to 60.1 in October after a 59.8 reading in September, The index had been forecast to pull back to 58.6.
Ahead of Thursdayâ€™s RBNZ statement, when the Reserve Bank are widely tipped to leave the OCR unchanged at a record low of 1.75%, direction for the NZD will be influenced by this afternoonâ€™s quarterly inflationexpectation report.
Global equity markets with the exception of the Shanghai edged higher on Friday - Dow +0.01%, S&P 500 +0.30%, FTSE +0.07%, DAX +0.28%, CAC +0.14%, Nikkei +0.53%, Shanghai -0.34%.
Gold prices fell 0.6% on Friday, closing out the week at $1,269 an ounce, WTI Crude Oil prices surged higher on Friday, up 2.2% closing out the week close to 2yr highs at $55.64 a barrel.
The NZDUSD opens at 0.6918 (mid-rate) this morning.
The NZDGBP rate has rallied 2.2% as the Bank of England (BOE) raised interest rates for the first time in more than a decade overnight, a landmark move after borrowing costs had slumped to the lowest level on record. The Monetary Policy Committee (MPC) voted by a majority of 7-2 to increase the Bank Rate by 0.25 percentage points, to 0.5%.
The Committee voted unanimously to maintain the stock of sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, at Â£10 billion. The Committee also voted unanimously to maintain the stock of UK government bond purchases, financed by the issuance of central bank reserves, at Â£435 billion.
CPI inflation rose to 3.0% in September. The MPC still expects inflation to peak above 3.0% in October, as the past depreciation of sterling and recent increases in energy prices continue to pass through to consumer prices. The MPC expects the effects of rising import prices on inflation to diminish over the next few years, and domestic inflationary pressures to gradually pick up as spare capacity is absorbed and wage growth recovers. Inflation is expected to fall back over 2018 and conditioned on the gently rising path of Bank Rate implied by current market yields, to approach the 2% target by the end of the forecast period.
At 50.8 in October, up from 48.1 in September, the seasonally adjusted IHS Markit/CIPS UK Construction Purchasing Managersâ€™ IndexÂ® (PMI) moved back above the 50.0 no-change mark. However, the latest reading was weaker than the post-crisis trend (54.7) and signalled only a marginal rise in overall construction output.
In the week ending October 28, the advance figure for seasonally adjusted initial claims was 229,000, a decrease of 5,000 from the previous week's revised level. The 4-week moving average was 232,500, a decrease of 7,250 from the previous week's revised average. This is the lowest level for this average since April 7, 1973 when it was 232,250. Claims taking procedures continue to be severely disrupted in the Virgin Islands. The ability to take claims has improved in Puerto Rico and they are now processing backlogged claims.
Overnight data tonight for the U.S. includes Non-Farm Employment Change, Unemployment rate, Average Hourly Earnings, Trade Balance, Final Services PMI and ISM Non-Manufacturing PMI, Factory Orders and FOMC Member Kashkari speaks.
Japanese bank holiday today, and on Sunday the US and Canada exit daylight savings and their clocks move back by 1 hour.
Global equity markets are mixed- Dow +0.09%, S&P 500 -0.15%, FTSE +0.90%, DAX -0.18%, CAC -0.17%, Nikkei +0.53%, Shanghai -0.37%.
Gold prices are unchanged trading at $1,277 an ounce. WTI Crude Oil prices are modestly higher at 0.1% overnight currently sitting at $54.45 a barrel
The NZDUSD opens at 0.6891 (mid-rate) this morning.
The NZD spiked higher following yesterdayâ€™s stellar employment report. The data came in well ahead of economists forecasts, with employment rising by 2.2% in Q3 (exp +0.8%), while unemployment fell to 4.6% (exp 4.7%). The NZDUSD which is currently trading back below 0.69 peaked overnight at 0.6928.
Overnight and ahead of this morningâ€™s FOMC statement the USD received a boost on the back of better than expected economic data. Private sector employment for the month of October increased by 235k jobs following a downwardly revised 110k jobs in September. Economists had expected the addition of 135k jobs, while Septemberâ€™s jobs gains were originally reported at 135k.
As expected the Federal Reserve has kept the Funds rate unchanged at 1.0%-1.2% and delivered what appears to be a balanced statement. The Fed confirmed that they are on track to continue to hike rates gradually, with the economy expected to continue to expand at a moderate pace. The Fed also confirmed that the balance sheet normalisation which was initiated in October is proceeding. The market is currently pricing in a 98% chance that the Fed will hike in December.
The UK Purchasing Managers' Index (PMI) rose to 56.3 in October, up from a revised 56.0 reading in September. Economists had expected the index to remain unchanged from Septembers original 55.9 reading.
Global equity markets with the exception of the FTSE are edging higher- Dow +0.08%, S&P 500 +0.16%, FTSE -0.07%, DAX +1.78%, CAC +0.20%, Nikkei +1.86%, Shanghai +0.08%.
Gold prices have retraced yesterdayâ€™s fall, up 0.7% trading at $1,277 an ounce. WTI Crude Oil prices have continue to rise, up 0.3% overnight currently sitting at $54.41 a barrel.
The NZDUSD opens at 0.6841 (mid-rate) this morning.
Ahead of this morning's quarterly employment report the NZD finds itself down against the majors. The GBP continues to push higher on expectations of a rate hike, while better than expected economic data has boosted both the EUR and USD.
Last night's Eurostat third quarter, preliminary flash estimate showed the Euro-zone economy expanded at a faster pace than expected. Q3 gross domestic product increased by 0.6% q/q following a 0.7% rise in Q2. Economists had expected the economy to expand by 0.5%. A fall in energy prices is the main reason for a fall in core inflation according to the report. A preliminary estimate of Euro-zone inflation for the month of October eased to 1.4%, slightly below forecasts of an unchanged 1.5% result.
The USD is benefiting from an unexpected increase in the Chicago-area business activity, with the Chicago business barometer rising to to 66.2 in October, up from 65.2 in September. The barometer had been expected to pull back to 61.0.
Consumer Confidence in the US spiked to a near 17yr high with the Conference Board reporting its consumer confidence index rose to 125.9 in October from an upwardly revised 120.6 in September. Economists had forecast the index to edge up to 121 from Septemberâ€™s previously reported 119.8 reading.
This morning the NZD direction will be driven by our quarterly employment report, with expectations of an increase in employment of 0.8% with unemployment expected to dip to 4.7% down from 4.8% for the previous quarter.
Global equity markets are edging higher- Dow +0.07%, S&P 500 +0.14%, FTSE +0.07%, DAX +0.09%, CAC +0.18%, Nikkei 0.00%, Shanghai +0.07%.
Gold prices are down 0.7% trading at $1,268 an ounce. WTI Crude Oil prices have continued to edge higher, up 0.4% overnight currently sitting at $54.27 a barrel.
The NZDUSD opens at 0.6866 (mid-rate) this morning.
In what has been a very quiet start to the trading week the British Pound has been the best performing of the G10 currencies as investors position their portfolios in anticipation of the BoE hiking rates by 25bp on Thursday.
Despite the ongoing political tensions within the Euro-zone the European Commission economic sentiment index increased more than expected in October, with the index posting a reading of 114.0, up from 113.1 in September and ahead of the forecast 113.3 reading. Economic confidence is now at its highest level since January 2001.
The US Commerce Department report on both personal income and personal spending will have pleased the Federal Reserve as they look for an increase in inflation. The report showed personal income rose in line with economists' forecasts in September rising by 0.4% following a 0.2% increase in August, while during the same period personal spending surged up by 1.0% following a 0.1% increase in August. Economists had forecast spending to increase by 0.8%.
Today's domestic data releases are expected to have little effect on the currency with investors looking ahead to tomorrow morning's quarterly employment report for direction.
Global equity markets are mixed- Dow -0.3%, S&P 500 -0.3%, FTSE -0.23%, DAX +0.09%, CAC -0.01%, Nikkei +0.01%, Shanghai +0.77%.
Gold prices are little changed, up 0.4% trading at $1,277 an ounce. WTI Crude Oil prices have continued to edge higher, up 0.3% overnight currently sitting at $54.05 a barrel.
The NZDUSD opens at 0.6837 (mid-rate) this morning.
The Kiwi has fallen from Mondayâ€™s high of 0.6990 to trade a 155 point range or 2.2% this week, and opens a couple of points above the overnight, and week low of 0.6835.
Where to from here? The May 10th, 2017 low was 0.6814 and beyond that the low of 30th May 2016 of 0.6671 is the next major support. Technically the Kiwi is heavily oversold in the charts and has moved a long way from the 10 and 20 moving day averages. On that basis we could expect a short term bounce as a retracement in the downtrend to 0.6950 or even 0.7000.
Fundamentally we have seen a shift from the broad 0.7000 â€“ 0.7400 range and over the medium term a new range of 0.6600 to 0.7000 will become the new norm. Importers will look to take cover on short term moves higher above 0.6900. Exporters will continue to buy on dips, targeting new lows at sub 0.6850 levels. The looming Fed rate hike in December will continue to see a stronger USD and therefore a weaker NZD in the medium term.
The Governing Council of the ECB announced overnight that the interest rates on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively.
The ECB cut QE purchase volumes in half to 30 billion euros a month starting in January 2018. The preliminary end date was moved forward from December 2017 to September 2018. Purchases could be increased temporarily if needed, and the end date might be moved even further into the future if needed. Draghi also said that purchases wonâ€™t end abruptly. That suggests QE will be extended beyond September next year, with purchases probably gradually tapered to zero.
In the week ending October 21, the advance figure for seasonally adjusted U.S. Initial Claims was 233,000, an increase of 10,000 from the previous week's revised level. The previous week's level was revised up by 1k from 222k to 223k. The 4-week moving average was 239.5k. Claims taking procedures continue to be severely disrupted in Puerto Rico and the Virgin Islands as a result of power outages and infrastructure damage caused by Hurricanes Irma and Maria.
Tonightâ€™s major data releases are the Advanced GDP and GDP Price Index for the U.S. and revised University of Michigan Consumer Sentiment and Inflation Expectations. Sunday sees the U.K. and most European Countries end Daylight Savingsincluding Switzerland by moving their clocks back one hour. Event calendars will then update timings accordingly.
Global equity markets are higher: Dow +0.38%, S&P 500 +0.26%, FTSE +0.53%, DAX +1.39%, CAC +1.50%, Nikkei +0.15%, Shanghai +0.31%.
Gold prices are down $9 or 0.7% trading at $1,267 an ounce. WTI Crude Oil prices are up another 1.0% overnight currently sitting at $52.58 a barrel.
The NZDUSD opens at 0.6869 (mid-rate) this morning.
The NZD remains under pressure against the majors but has managed to rebound against both the CAD and the AUD over the past 24hrs.
The AUD fell sharply after yesterdayâ€™s inflation report undershot market expectations. Economists had forecast Q3 CPI to increase by 0.8% with the trimmed mean tipped to remain unchanged at 0.5%. On an annual basis consumer prices advanced 1.8 %, unchanged from Q2 but missing forecasts for 2.0%, while annual trimmed mean is running at 1.8% again shy of the forecast 2% rise. The result has seen the AUD plunge against all its counterparts.
Stronger than expected US data has failed to strengthen the USD as concerns around whether Trump can gain enough support for his tax reform package mount. This morning the U.S. Department of Commerce reported that durable goods orders rose by 2.2% in September well ahead of the forecast 1% increase, while for the same period new home sales confounded economists who had forecast sales to dip from 560k in August to 555k in September when sales surged by 18.9% to an annual rate of 667k.
The GBP continues to outperform with last nightâ€™s better than expected Q3 GDP fuelling expectations of a rate hike at next weekâ€™s monetary policy meeting. The Office for National Statistics reported gross domestic product grew by 0.4% during the September quarter, ahead of the predicted 0.3% increase. The Pound has been the performer of the G10 currencies as investors price in a now expected interest rate hike.
Global equity markets are broadly lower- Dow -0.72%, S&P 500 -0.78%, FTSE -1.05%, DAX -0.46%, CAC -0.37%, Nikkei -0.45%, Shanghai +0.26%.
Gold prices are little changed, down 0.3% trading at $1,276 an ounce. WTI Crude Oil prices have continued to push higher, up 1.0% overnight currently sitting at $52.39 a barrel.
The NZDUSD opens at 0.7146 (mid-rate) this morning.
The NZD is down against the majority of its trading rivals with yesterdayâ€™s disappointing dairy trade auction weighing heavily on the currency. We expect the NZD to trade sideways ahead of Winston Peterâ€™s announcement on which party he will side with to form a government.
Overnight a sharp fall in US housing starts and building permits saw the USD pull back from its intraday highs. The Commerce Department report showed housing starts plunged 4.7%in September to an annual rate of 1.127m. During the same period building permits plummeted 4.5% to an annual rate of 1.215m with Augustâ€™s previously reported result also downwardly revised to 1.272m.
The UK unemployment rate remained at 4.3% in the three months to August, its lowest level since 1975 and in line with expectations. Average earnings increased by 2.2% during the same period slightly ahead of the expected 2.1 increase.
Global equity markets have turned positive - Dow +0.67%, S&P 500 +0.14%, FTSE +0.36%, DAX +0.37%, CAC +0.42%, Nikkei +0.13, Shanghai +0.29%.
Gold prices have edged lower, down 0.4% trading at $1,280 an ounce. WTI Crude Oil prices have are up 1.0% overnight currently trading at $52.04 a barrel.
The NZDUSD opens at 0.7169 (mid-rate) this morning.
The NZD has edged higher against the majority of its trading partners with this morningâ€™s Q3 inflation report set to signal direction from here.
This morningâ€™s Q3 Consumer Price Index (CPI) is expected to increase by 0.4% q/q following on from Q2 when CPI remained flat after increasing by 1% in Q1. The forecast increase is expected to be driven by rising fuel and food prices.
Overnight the Empire State Manufacturing index unexpectedly surged to 30.2 in October following Septemberâ€™s 24.4 reading. Economists had forecast the index to pull back 20.7. A positive reading indicates growth in regional manufacturing activity.
Spain's Prime Minister Mariano Rajoy last night extended the deadline for Catalan leader Carles Puigdemont to clarify whether or not Catalonia plans to break away from Spain. The original deadline of Monday 08:00 GMT has been pushed out three days.
Global equity markets remain mixed - Dow +0.24%, S&P 500 +0.03%, FTSE -0.11%, DAX +0.09%, CAC +0.21%, Nikkei +0.47, Shanghai -0.36%.
Gold prices are little changed, down 0.2% trading at $1,301 an ounce. WTI Crude Oil prices have pushed higher, up 0.9% overnight currently sitting at $51.89 a barrel.
The NZDUSD opens at 0.7175 (mid-rate) this morning.
We open this morning with the USD on the back foot after Fridayâ€™s US inflation data fell short of economistsâ€™ projections cutting the odds of a December rate hike.
Consumer prices in the U.S. which were boosted by rising oil prices increased by 0.5% in September (exp +0.6%) while core CPI (which excludes food and energy prices) edged up by 0.1% (exp +0.2%), the USD fell sharply on the announcement.
US retail sales spiked higher in September, up 1.6% compared to a 0.2% fall in August. Economists had expected retail sales to increase by 1.7% with car sales surging 3.6% as vehicles lost to hurricanes were quickly replaced.
Consumer sentiment in the US increased significantly in October with the University of Michigan consumer sentiment index spiking to 101.1 after pulling back to 95.1 in September. The index had been expected to edge down to 95.0.
The key domestic drivers for the NZD during the week ahead will be the announcement of the makeup of our new Government, possibly as early as tonight and tomorrow morningâ€™s quarterly inflation report.
Global equity markets closed out the week mixed - Dow +0.13%, S&P 500 +0.08%, FTSE -0.28%, DAX +0.07%, CAC -0.17%, Nikkei +0.96%, Shanghai +0.13%.
Gold prices edged higher on Friday, up 0.8% closing out the week at $1,304 an ounce, WTI Crude Oil prices surged higher on Friday, up 1.5%% closing out the week at $51.45 a barrel, for a weekly 4% gain.
The NZDUSD opens at 0.7076 (mid-rate) this morning.
The EUR is the strongest performer of the G10 currencies, strengthening against all its rivals after Catalan leader Carles Puigdemont stopped short of declaring immediate independence and instead said the region will seek to hold official talks with the Spanish government over their future. The EUR is currently trading at 2 week highs against the USD.
There has been little reaction to this morning's Fed minutes which confirmed there is a growing split between Fed officials on the timing of future rate hikes. Several Federal Reserve officials expressed concern over the persistence of low inflation and questioned whether or not a rate hike is warranted in December, while other voting members believe a hike in December wasâ€ likely to be warranted if the medium-term outlook remained broadly unchanged." Officials noted â€œthat interpreting the next few inflation reports would likely be complicated by the temporary run-up in energy costs and the prices of other items affected by storm-related disruptions and rebuilding."
Once again there is little in the way of market moving data during our trading day with investors looking to tonight's US PPI and ECB President Draghi's speech on monetary policy for direction.
Global equity markets remain mixed - Dow +0.03%, S&P 500 +0.03%, FTSE -0.06%, DAX +0.17%, CAC -0.02%, Nikkei +0.28, Shanghai +0.16%.
Gold prices have edged lower, down 0.4% trading at $1,286 an ounce. WTI Crude Oil prices have pushed higher, up 0.5% overnight currently sitting at $51.23 a barrel.
The NZDUSD opens at 0.7068 (mid-rate) this morning.
Currency markets continue track sideways as the US economic data drought continues. Overnight, tonight the release of the FOMC meeting minutes from the 21st Sept meeting should provide investors with direction.
The EUR strengthened overnight after German exports exceeded economistsâ€™ estimates in August. Following on from Julyâ€™s 0.2% increase in exports, last nightâ€™s report showed exports surged a calendar-and-seasonally adjusted 3.1% in August. Imports also rose with a 1.2% increase in August following on from 2.4% growth in July. German trade surplus increased to 21.6B up from Julyâ€™s 19.3B and well ahead of the forecast 19.8B result.
Manufacturing production along with construction output in the UK for the month of September helped the GBP keep pace with the EUR and outperform its other rivals. Manufacturing output grew 2.8% y/y in August following on from Julyâ€™s 2.7% gain and surpassed forecasts of a 1.9% increase. Construction output which fell by 1% in July and was expected to remain flat in August, increased by 0.6%.
Following reports that Saudi Arabia would cut its oil exports in November by 560k barrels a day crude oil prices have surged higher currently up circa 3%.
NZâ€™s Political uncertainty which continues to weigh on the currency looks to continue beyond Thursday after Winston Peters last night announced that his self-imposed deadline was to be extended.
Global equity markets remain mixed - Dow +0.22%, S&P 500 +0.17%, FTSE -0.40%, DAX -0.21%, CAC -0.04%, Nikkei +0.64, Shanghai +0.26%.
Gold prices have edged higher, up 0.7% trading at $1,291 an ounce. WTI Crude Oil prices have surged higher, up 2.6% overnight currently sitting at $50.96 a barrel.
The NZDUSD opens at 0.7069 (mid-rate) this morning.
In the absence of any tier one economic data releases and with the US, Japan and Canada all enjoying a long weekend, currency markets have been relatively subdued.
The NZDUSD consolidated below 0.71 with the currency pair confined to a tight 30pip (0.7055-0.7085) trading range since Fridayâ€™s close. Election uncertainty will remain the main driver for the NZD this week.
The British Pound has been the best performing currency over the past 24 hours after speculation of Conservative party infighting and a possible challenge to Theresa Mayâ€™s leadership was rebuffed by May and a number of prominent Conservative party members.
The EUR received a boost overnight, as protests in Spain against Cataloniaâ€™s bid for independence abated and German industrial output and investor confidence data releases came in ahead of expectations. Reversing a 0.1% fall in July industrial output grew 2.6% m/m in September, well ahead of the predicted 0.9% increase, while investor confidence in October strengthened to a 10-year high with the Sentix index unexpectedly rising to 29.7 up from 28.2 in September. Economists had expected the index to pull back to 28.0.
Global equity markets remain mixed - Dow -0.02%, S&P 500 -0.06%, FTSE -0.20%, DAX +0.16%, CAC +0.11%, Nikkei Closed, Shanghai +0.76%.
Gold prices have edged higher, up 0.5% trading at $1,282 an ounce. WTI Crude Oil prices are tracking higher up 0.8% overnight at $49.68 a barrel.
The NZDUSD opens at 0.7114 (mid-rate) this morning.
The US Dollar was the strongest performer overnight as the Kiwi opens on a 4 month low. The NZD has traded a 1.8%, 133 point range this week, and opens this morning 2 points off the overnight and weekâ€™s low of 0.7112 â€“ a level not seen since the 2nd of June 2017.
Australian Retail sales yesterday posted their biggest fall in about four-and-a-half years, plunging 0.6% in August.Australian Trade Balance in trend terms, was a surplus of $735m in August 2017, a decrease of $282m on the surplus in July 2017. In seasonally adjusted terms, the balance on goods and serviceswas a surplus of $989m in August 2017, an increase of $181m on the surplus in July 2017.
Canada's merchandise trade deficit totalled $3.4 billion in August, widening from a $3.0 billion deficit in July. Exports decreased 1.0% on lower volumes, while imports were unchanged. Following two months of large decreases, exports were down a further 1.0% to $43.6 billion in Augustâ€”despite increases in 6 of 11 sections.
In the week ending September 30, the advance figure for seasonally adjusted initial claims was 260,000, a decrease of 12,000 from the previous week's unrevised level of 272,000. The 4-week moving average was 268,250, a decrease of 9,500 from the previous week's unrevised average of 277,750. Hurricanes Harvey, Irma, and Maria impacted this week's claims.
The U.S. Goods and Services Trade deficit was $42.4 billion in August, down $1.2 billion from $43.6 billion in July, revised. August exports were $195.3 billion, $0.8 billion more than July exports. August imports were $237.7 billion, $0.4 billion less than July imports. The August decrease in the goods and services deficit reflected a decrease in the goods deficit of $0.9 billion to $64.4 billion and an increase in the services surplus of $0.3 billion to $22.0 billion.
New orders for U.S.-made goods rose in August and orders for core capital goods were stronger than previously reported, suggesting robust business spending could help offset some of the economic drag of Hurricanes Harvey and Irma. Factory goods orders increased 1.2% as demand for a range of goods rose. Orders fell by an unrevised 3.3% in July.
Overnight tonight data includes Canadian Employment Change and Unemployment rate, U.S. Average Hourly Earnings, Non-Farm Employment Change and Unemployment rate, U.S. Consumer Credit, and FOMC Members Dudley and Kaplan are delivering speeches.
U.S. Bank Holiday on Monday for Columbus Day. Canadian Bank holiday for Thanksgiving and Japanese Bank holiday on Monday in observance of Health Sports Day
Global equity markets are higher: Dow +0.41%, S&P 500 +0.50%, FTSE +0.54%, DAX -0.02%, CAC +0.30%, Nikkei +0.01%, Shanghai Closed.
Gold prices are modestly lower down $3 or 0.2% at $1,269 an ounce. WTI Crude Oil prices have rallied strongly overnight up 1.4% at $50.61 a barrel.
The NZDUSD opens at 0.7158 (mid-rate) this morning.
Currencies have traded tight ranges overnight as investors look to this morningsâ€™ speeches from ECB President Mario Draghi and Fed Chair Janet Yellen for direction.
US economic data releases were ahead of expectations, with both Manufacturing PMI and the ADP Non-Farm Employment report exceeding economistsâ€™ forecasts. The Institute for Supply Management reported a sharp rise in their non-manufacturing index, with the index spiking to 59.8 in September, up from 55.3 in August and well ahead of the forecast 55.5 reading.
As expected employment in the US private sector for the month of September slowed, but not as fast as economistsâ€™ estimates. The report showed private sector employment rose by 135K in September following on from Augustâ€™s downwardly revised 228K jobs. Economists had forecast employment in this sector to rise by 131k jobs.
The UK services purchasing managers' index for the month of September rose to 53.6 following Augustâ€™s 11mth low of 53.2. Economists had expected the index to remain unchanged. A reading above 50.0 indicates growth.
Mario Draghi is speaking as I type while Janet Yellen is due to deliver opening remarks at a community banking conference hosted by the Federal Reserve Bank at 08:15 this morning.
Global equity markets are mixed - Dow +0.15%, S&P 500 +0.16%, FTSE -0.01%, DAX +0.53%, CAC -0.08%, Nikkei +0.06%, Shanghai Closed.
Gold prices are holding steady at $1,272 an ounce. WTI Crude Oil prices are back below $50 a barrel, down 1% overnight at $49.93 a barrel.
The NZDUSD opens at 0.7155 (mid-rate) this morning.
The NZD continues to slip lower, underperforming overnight as the Global Dairy Auction suffers its largest fall since March this year.
The GDT index fell 2.4% from the previous auction a fortnight ago, with an average selling price of $3,223 per tonne. Whole milk powder (WMP) prices which account for just over 50% of sales were down by 3%, while skimmed milk powder and butter prices also declined down 1.4% and 4% respectively.
Late yesterday afternoon the RBA as widely expected kept its cash rate unchanged at a record low of 1.5%, with Reserve Bank Gov Phillip Lowe stating that slow growth in wages along with high household debt are likely to constrain both growth and spending.
The GBP fell against all the majors after the IHS Markit construction purchasing managers' index tumbled to 48.1 in September after recording a reading of 51.1 in August. The last time the index recorded a sub 50 reading (signalling contraction) was August 2016.
With little in the way of economic data releases during our trading day investors are likely to focus on speeches from both ECB President Draghi, and Fed Chair Yellen due out this evening before adding to their positions.
Global equity markets have continue to push higher - Dow +0.33%, S&P 500 +0.12%, FTSE +0.39%, DAX +0.58%, CAC +0.32%, Nikkei +1.05%, Shanghai Closed.
Gold prices are unchanged trading at $1,273 an ounce. WTI Crude Oil prices are holding steady at $50.42 a barrel.
The NZDUSD opens at 0.7205 (mid-rate) this morning.
The USD continues to rise, boosted overnight by stronger than expected manufacturing ISM and firmer construction spending. In stark contrast the GBP has been the worst performing of the G10 currencies with the growing rift between Theresa May and Boris Johnson over the length of a planned Brexit transition, and a disappointing manufacturing PMI report weighing on the currency.
The US manufacturing sector unexpectedly expanded in September with the ISM purchasing managers index increasing to 60.8 up from 58.8 in August. Economists had forecast the index to fall back to 50.8. According to the latest Commerce Department report, construction spending for the month of August rose by 0.5% to $1.218T following a 1.2% pull back to $1.212t in July. Spending had been expected to increase by 0.2%
The GBP came under pressure last night after a Conservative party spokesman conceded that the cabinet is split over the implementation of Brexit, and that Boris Johnsonâ€™s interventions, risk weakening the UKâ€™s negotiating position. The GBP weakened further after the manufacturing PMI report for the month of September showed a pullback from 56.9 in August to 55.9, below economistsâ€™ forecasts of 56.4.
This afternoon the RBA are expected to keep their interest rate unchanged at a record low of 1.5%.
Global equity markets have edged higher - Dow +0.50%, S&P 500 +0.28%, FTSE +0.90%, DAX +0.58%, CAC +0.39%, Nikkei +0.22%, Shanghai +0.28%.
Gold prices are down 1% trading at $1,273 an ounce. WTI Crude Oil prices are on the back foot currently down 2.0% trading at $50.42 a barrel.
The NZDUSD opens at 0.7203 (mid-rate) this morning.
A quiet end to the quarter saw the NZD trade tight ranges against all its rivals. The NZDUSD closed out the week just above 0.7200 down nearly 2% since the September 24th election.
Fridayâ€™s US economic data releases which were once again mixed, had little effect on dollar. Stronger than expected Chicago PMI data was countered by disappointing personal consumption expenditures (PCE) and consumer sentiment reports. The Chicago business barometer spiked to 65.2 in September from 58.9 in August surprising economists who had tipped the index to dip to 58.5. The PCE index which had been forecast to rise to 0.2 in September up from 0.1 in August, came up short with a 0.1 reading, while consumer sentiment deteriorated by slightly more than previously estimated in September with the index falling to 95.1 from the preliminary reading of 95.3.
End of month European data releases disappointed with German retail sales and European flash inflation data releases printing below their respective forecasts. German retail sales decreased by 0.4% (exp +0.5%) in August, while Euro-zone inflation remained at 1.5% in September. Economists had expected inflation to edge up to 1.6%.
The UK gross domestic product expanded in line with forecasts, growing 0.3% in Q2 while consumer confidence in the UK showed a slight improvement with the index reading -9 for September ahead of the forecast -11 reading and up from Augustâ€™s -10 result.
Expect a quiet start with the majority of Australia enjoying a long weekend, and an absence of any local economic data releases.
Global equity markets closed out the week on the rise - Dow +0.11%, S&P 500 +0.37%, FTSE +0.68%, DAX +0.98%, CAC +0.68%, Nikkei -0.03%, Shanghai +0.28%.
Gold prices edged lower on Friday closing out the week at $1,279 an ounce, WTI Crude Oil was little changed on Friday, closing out the week at $51.67 a barrel.
The NZDUSD opens at 0.7202 (mid-rate) this morning.
The NZD came under further downward pressure yesterday following disappointing Trade Balance and Business Confidence data releases. New Zealandâ€™s Trade Balance plunged into negative territory recording a -$1235M deficit in September following on from a $98M surplus in August. The report had been expected to show an $825M deficit. Later in the day the ANZ reported business confidence according to their measure fell from 18.3 in August to 0.0 in September.
Overnight US economic data releases fell short of economistâ€™s estimates with Consumer Confidence dipping to 119.8 in September down from 120.4 in August, and just below its forecast 119.9 reading. New home sales in the US for the month of August unexpectedly decreased with the Commerce Department report showing sales were down 3.4% to an annual rate of 560k in August following Julyâ€™s upwardly revised 580k sales. Sales had been forecast to increase to 583k from the previously reported 571k in July.
This morning Federal Reserve chair Janet Yellen while reaffirming the Fedâ€™s intention to continue to gradually raise interest rates, admitted the central bank may have â€œmisjudgedâ€ the factors dragging on US inflation. In a speech titled "Inflation, Uncertainty, and Monetary Policy" Yellen said â€œMy colleagues and I may have misjudged the strength of the labour market, the degree to which longer-run inflation expectations are consistent with our inflation objective, or even the fundamental forces driving inflation.â€ These comments seem to have stalled the recent USD rally.
Global equity markets remain mixed - Dow +0.05%, S&P 500 +0.14%, FTSE -0.21%, DAX +0.08%, CAC +0.03%, Nikkei -0.33%, Shanghai +0.06%.
Gold prices are trading back below $1,300 a barrel currently sitting at $1,297an ounce. WTI Crude Oil prices have edged higher, up 0.2% trading at $51.93 a barrel.
The NZDUSD opens at 0.7269 (mid-rate) this morning.
Growing geopolitical tensions between North Korea and the US has seen the JPY outperform as investors flock to safe-havens.
The NZD and the EUR have been the worst performing of the G10 currencies after both the NZ and German weekendâ€™s elections failed to produce an outright winner. The NZDUSD which opened yesterday at 0.7329 has bounced this morning off the 0.7250 support level.
German Chancellor Angela Merkel's centre-right CDU-party will now have to form a new coalition government after her current coalition partner, the social democratic SPD, ruled out of forming any alliance, saying they will now become an opposition party. The EURUSD is currently down 1% from yesterdayâ€™s open.
Overnight the only economic data release of note came in the form of German business sentiment which unexpectedly declined for the second consecutive month in September. The Ifo Institute report showed the business confidence index fell to 115.2 in September, following Augustâ€™s pull back to 115.9. The index had been expected to edge higher.
Today the release of New Zealandâ€™s trade balance followed by the ANZ business confidence report are likely to have little effect on the currency with investors looking ahead to Fed Chair Janet Yellenâ€™s speech titled â€œInflation, Uncertainty, and Monetary Policy", due out tonight for future USD direction.
Global equity markets remain mixed - Dow -0.31%, S&P 500 -0.33%, FTSE -0.13%, DAX +0.02%, CAC -0.27%, Nikkei +0.50%, Shanghai -0.33%.
Gold prices are up 0.9% trading at $1,308 an ounce. WTI Crude Oil prices have started the week on the front foot, up 2.3% trading at $51.81 a barrel.
The NZDUSD opens at 0.7329 (mid-rate) this morning.
As expected the weekendâ€™s election has positioned New Zealand Firstâ€™s Winston Peterâ€™s in the roll of â€œKing or Queen maker â€ but with the National party still in the box seat the NZD has so far managed to hold onto Fridays gains.
Angela Merkel has won a fourth term as Chancellor after her Christian Democratic Union party gained 32.5% of the German vote with her main rival the SPD party only managing 20% as for the first time since the second world war the far-right party with 13.5% of the vote will have representation in the German parliament. The EUR is slightly softer following this result.
Euro-zone flash manufacturing and services PMI data releases were ahead of expectations for the month of September, with manufacturing PMI increasing to 58.2 (exp 57.2) and services PMI increasing to 55.6 (exp 54.7).
Late on Friday evening following Thursdayâ€™s announcement from UK Prime Minister Mayâ€™s announcement that the UK were prepared to pay the EU a EUR20 billion Brexit deposit, rating agency Moodyâ€™s downgraded the UKâ€™s credit rating one notch to Aa2.
Global equity markets closed out the week mixed- Dow -0.04%, S&P 500 +0.06%, FTSE +0.64%, DAX -0.06%, CAC +0.78%, Nikkei -0.25%, Shanghai -0.16%.
Gold prices edged higher on Friday closing out the week at $1,296 an ounce, WTI Crude Oil was little changed on Friday, closing out the week above $50 a barrel at $50.66.
The NZDUSD opens at 0.7312 (mid-rate) this morning.
TCommodity linked currencies including the NZD have underperformed over the past 24hrs with the AUD suffering the sharpest fall on a combination of falling metal prices and confirmation from RBA Governor Lowe that interest rates in Australia will remain on hold for some time. Gov Lowe went on to state that the tightening actions of other major central banks would not influence the RBAâ€™s decisions or make it more likely for the bank to tighten policy. The AUD fell sharply on the back of these comments.
TYesterday the BOJ voted 8-1 in favour of maintaining its current monetary stimulus and at the same time retained a -0.1% interest rate on current accounts that financial institutions maintain at the bank.
TThere were better than expected economic data release out of the US overnight with first-time claims for U.S. unemployment benefits unexpectedly decreasing for the week ending 16/09, while Federal Reserve Bank of Philadelphia reported an increase in manufacturing activity, with the index rising to 23.8 in September up from 18.9 in August.
TThe EUR also benefitted from upbeat economic data with consumer confidence within the Euro-zone increasing to -1, its highest reading since 2001.
TFollowing reports that UK Prime Minister Theresa May has the full backing of her cabinet to make an â€œopen and generousâ€ offer of â‚¬20bn during the Brexit transition period, on the condition that the UK will retain access to the single market and some form of customs union which will allow the UK to strike its own trade deals during the 2 year transition period, the GBP surged higher and has been the best performing of the G10 currencies.
TGlobal equity markets remain mixed - Dow -0.15%, S&P 500 -0.24%, FTSE -0.11%, DAX +0.25%, CAC +0.49%, Nikkei +0.18%, Shanghai -0.24%.
TGold prices are down 0.7% trading at $1,391 an ounce. WTI Crude Oil prices have edged higher up 0.4% trading at $50.62 a barrel.
The NZDUSD opens at 0.7351 (mid-rate) this morning.
This morning the Federal Reserve delivered on its promise to reduce its $4.5 trillion portfolio by allowing $10B in bonds to mature in October, without replacing them. The Fedâ€™s portfolio with includes Treasury and mortgage-backed securities will be gradually reduced throughout 2018 with monthly reductions increasing to a maximum of $50B.
As widely expected the Federal Open market Committee kept the federal funds rate between 1.00% and 1.25% while at the same time confirming that they remain on track to hike rates at their December meeting. Fed officials continue to forecast three rate hikes in 2018 with interest rates expected to peak at 2.9% in 2020.
In reaction to an unchanged interest rate the USD fell sharply with the NZDUSD spiking to 0.7430 before the accompanying statement reversed the move.
This morning the expectations are for New Zealandâ€™s Q2 GDP reading to increase by 0.8% from Q1â€™s 0.5% rise. It is worth noting that the past two readings have fallen short of expectations, but given that Q2 includes both the Masters Games and the British Lions rugby tours we would be surprised if todayâ€™s result was short of its forecast.
Global equity markets are mixed - Dow -0.02%, S&P 500 -0.02%, FTSE -0.05%, DAX +0.06%, CAC Closed, Nikkei +0.05%, Shanghai +0.27%.
Gold prices are down 0.7% trading at $1,300 an ounce. WTI Crude Oil prices are back on the front foot, up 1.9% trading at $50.43 a barrel.
The NZDUSD opens at 0.7318 (mid-rate) this morning.
A second consecutive increase in dairy prices at this morningâ€™s auction has helped the NZD outperform all its rivals. Following on from an increase of 0.3% at the 5th Sep auction this morningâ€™s auction saw prices increase by 0.9%. Whole milk powder (WMP) prices increased by 0.6% to an average price of US$3,122/MT.
Overnight US economic data releases sent mixed messages to investors with housing starts unexpectedly decreasing during the month of August while building permits (a future demand indicator) surged by 5.7% to a rate of 1.3M in August up from 1.23M in July.
German economic sentiment increased notably in September with the ZEW indicator rising 7 points to 17 well ahead of the forecast score of 13. The indicator had a final reading of 10 for the month of August.
This morningâ€™s current account data release is likely to have little effect on the currency as investors await tomorrow morningâ€™s FOMC statement due for release at 6:00am.
Global equity markets have edged higher - Dow +0.22%, S&P 500 +0.11%, FTSE +0.30%, DAX +0.02%, CAC Closed, Nikkei +1.96%, Shanghai -0.18%.
Gold prices are little changed trading at $1,309 an ounce. .WTI Crude Oil prices have given back yesterdayâ€™s gains, currently down 1.1% at $49.48 a barrel.
The NZDUSD opens at 0.7252 (mid-rate) this morning.
After trading to a session high of 0.7340 against the USD yesterday afternoon the NZD opens this morning testing 0.7250 support. The USD strengthened against all its rivals overnight as investors positioned their books ahead of Thursdays FOMC statement.
Although the Federal Reserve are expected to leave interest rates unchanged at this weekâ€™s meeting, the anticipated announcement of the start of balance sheet normalization and the likelihood of the Fed keeping the option of a December rate hike alive has been the catalyst for last nightâ€™s USD move. The US 10-year Treasury rate continues to push higher and the latest polls are pricing in a 56% chance that the Fed will hike at the December meeting.
Euro-zone inflation rose in line with expectations, hitting a four month high in August. The Eurostat report showed consumer prices increases by 1.5% y/y in August following a 1.3% increase in July.
This morningâ€™s Westpac consumer sentiment data release is likely to have little effect on the currency, while this afternoonâ€™s RBA monetary policy meeting minutes should be the main driver for the NZDAUD cross rate.
Global equity markets have turned positive - Dow +0.3%, S&P 500 +0.05%, FTSE +0.52%, DAX +0.32%, CAC Closed, Nikkei +0.52%, Shanghai +0.28%.
Gold prices are down 1.5% trading at $1,306 an ounce. .WTI Crude Oil prices have pushed higher, currently up 0.7% at $50.02 a barrel.
The NZDUSD opens at 0.7282 (mid-rate) this morning.
Disappointing US economic data releases has seen the USD slump against all its rivals, with the GBP once again the strongest performer as investors continue to price in an expected interest rate hike from the BOE. Improving global sentiment has led to JPY weakness as risk traded currencies outperform.
US retail sales and industrial production data releases for the month of August fell short of economistsâ€™ estimates with retail sales decreasing by 0.2% following a downwardly revised 0.3% gain in July. The report had been expected to show a 0.15 increase following Julyâ€™s previously reported 0.6% gain. Industrial production for the same period declined by 0.9% with Hurricane Harvey the main contributor to the fall. The forecast was for a slight increase of 0.1% following Julyâ€™s 0.4% gain.
Election polls as well as Thursdayâ€™s quarterly GDP data release are the key domestic drivers for the NZD this week, while Thursdayâ€™s monetary policy statements from the Federal Reserve and the BOJ along with tomorrows RBA monetary policy meeting minutes are likely to dictate direction.
Global equity markets closed out the week mixed - Dow +0.29%, S&P 500 +0.18%, FTSE -1.10%, DAX -0.17%, CAC Closed%, Nikkei +0.52%, Shanghai -0.53%.
Gold prices dipped 0.2% on Friday closing out the week at $1,319 an ounce, for a weekly loss of 1.8%. WTI Crude Oil prices gained 1.1% on Friday pushing prices up to $49.89 a barrel, for a weekly gain of 5.1%.
The NZDUSD opens at 0.7235 (mid-rate) this morning.The Kiwi has traded an 86 point range or 1.19% in the past 24 hours and opens 0.7% lower than yesterdayâ€™s open against the USD and CAD, steady with the EUR and Pound, and modestly lower against the Yen and Aussie.
U.S. producer prices rebounded in August, driven by a surge in the cost of gasoline, and there were also signs of a pickup in underlying producer inflation. The U.S. Labor Department said its Producer Price Index for final demand increased 0.2% last month after slipping 0.1% in July. In the 12 months through August, the PPI rose 2.4% after advancing 1.9% in July. Economists had forecast the PPI gaining 0.3% last month and accelerating 2.5% from a year ago.
The U.S. Budget Balance for September was -107.7 billion better than the -118.6 billion market consensus, but worse than the -42.9 billion in August. Total outlays were $334 billion and total receipts were $226 billion.
Estimates from the U.K. Labour Force Survey show that, between February to April 2017 and May to July 2017, the number of people in work increased, the number of unemployed people fell, and the number of people aged from 16 to 64 not working and not seeking or available to work (economically inactive) also fell.
In the U.K. there were 32.14 million people in work, 181k more than for February to April 2017 and 379k more than a year earlier. The U.K. employment rate was 75.3%, the highest since comparable records began in 1971. The U.K. unemployment rate fell to 4.3% better than the 4.4% anticipated and 4.4% from August. At 1.46 million people unemployed, there were 75k fewer than from Feb to Apr 2017 and 175k less than a year earlier.
Latest estimates show that average weekly earnings for employees in the Great Britain in nominal terms (that is, not adjusted for price inflation) increased by 2.1%, both including and excluding bonuses, compared with a year earlier, and in real terms (that is, adjusted for price inflation) fell by 0.4%, both including and excluding bonuses, compared with a year earlier.
Global equity markets are mixed: Dow +0.08%, S&P500-0.03%, FTSE -0.28%, DAX +0.23%, CAC +0.16%, Nikkei +0.45%, Shanghai +0.14%.
Gold prices are down $10 or 0.8% currently trading at $1,321 an ounce. WTI Crude Oil prices have surged 2.3% higher currently trading at $49.33 a barrel.
The NZDUSD opens at 0.7284 (mid-rate) this morning.
The Kiwi was stronger than its major competitors except the GBP after a myriad of positive UK data releases overnight.
The U.K. Consumer Prices Index including owner occupiersâ€™ housing costs 12 month inflation rate was 2.7% in August 2017, up from 2.6% in July 2017 and better than the 2.8% the market was expecting. The Consumer Prices Index (CPI) 12-month rate was 2.9% in August 2017, up from 2.6% in July 2017.
U.K. PPI Input was up 1.6% in August, ahead of the 1.2% expected and much better than the -0.2% from July. The annual rate of inflation for goods leaving the factory gate increased for the first time in 6 months in August 2017. Factory gate prices (output prices) rose 3.4% on the year to August 2017, up from 3.2% in July 2017. Prices for materials and fuels (input prices) rose 7.6% on the year to August 2017, up from 6.2% in July 2017, with the change in the rate being driven mainly by crude oil.
UK House prices grew by 5.1% in the year to July 2017, unchanged from the year to June 2017. The UK Property Transaction statistics showed that in July 2017 the number of seasonally adjusted property transactions completed in the UK with a value of Â£40,000 or above increased by 8.3% compared to July 2016. Comparing July 2017 to June 2017, property transactions increased by 1.3%.
The U.S. Index of Small Business Optimism rose 0.1 points to 105.3 in August, basically unchanged from July. Five of the 10 Index components posted a gain and five declined. The Index peaked for this recovery at 105.9 in January, just 0.6 points above the August reading.
Global equity markets are higher except the UK: Dow +0.21%, S&P500 +0.19%, FTSE -0.17%, DAX +0.40%, CAC +0.62%, Nikkei +1.18%, Shanghai +0.09%.
Gold prices are up $2 or 0.2% currently trading at $1,331 an ounce. WTI Crude Oil prices are modestly higher too, up 0.2% currently trading at $48.09 a barrel.
The NZDUSD opens at 0.7244 (mid-rate) this morning.
The Kiwi has put in a mixed performance overnight as the USD was stronger against all the majors except the CAD.
Canadaâ€™s trend in housing starts was above the 200,000 unit mark for the eighth consecutive month.The trend in Canadian housing starts was 219,447 units in August 2017, compared to 217,339 units in July 2017.
A light data calendar to start the week sees Hurricane Irma grabbing the headlines. Hurricane Irma, which is the size or Texas of France (and France is twice the size of NZ), has set a record for the amount of cyclone energy generated in a single day and for maintaining wind speeds of 300km/hr for 37 straight hours. It is also the first time a category 4 or above Hurricane has made U.S landfall in the same year. Irma has more than 5 times as much energy as that of Hurricane Andrew, a category 5 storm that struck Florida in 1992.
Some estimates of the damage caused by Irma are at $172 billion in total U.S. damage not including the damage to Cuba and the Caribbean. Scientists have pointed to climate change as a warmer climate is likely to make hurricanes more intense, since warmer oceans lead to stronger storms and increase rainfall. U.S. economic growth is expected to slow briefly in Q3 because of Harvey and Irma, but should bounce back later this year and into 2018.
In July 2017 the seasonally adjusted Italian industrial production index increased by 0.1% compared with the previous month. The average of the last three months with respect to the previous three months was +1.4% and increased by 4.4% compared with July 2016.
Global equity markets are higher: Dow +1.17%, S&P500 +1.03%, FTSE +0.49%, DAX +1.39%, CAC +1.24%, Nikkei +1.41%, Shanghai +0.33%.
Gold prices have dropped $17 or 1.3% currently trading at $1,329 an ounce. WTI Crude Oil prices have rebounded 1.3% currently trading at $48.09 a barrel.
The NZDUSD opens at 0.7187 (mid-rate) this morning.
The Kiwi fell against all the G10 currencies overnight as the Kiwi was sold heavily in the US session, and after the Bank of Canada rate hike which surprised many analysts, who had not expected another rate increase until at least October.
The Bank of Canada has hiked its key interest rate for the second time in less than two months amid surprisingly resurgent growth across the country. The central bank raised its overnight lending rate by 0.25% to 1.0%. The Kiwi is down 2.0% against the CAD from this time yesterday.
Supporting the reason for another hike - Canadian Consumer spending remains robust, underpinned by continued solid employment and income growth. There has also been more widespread strength in business investment and in exports. Meanwhile, the housing sector appears to be cooling in some markets in response to recent changes in tax and housing finance policies.
Canada's merchandise trade deficit totalled $3.0 billion in July, narrowing from a $3.8 billion deficit in June. Imports fell 6.0% and exports decreased 4.9%, both due mainly to the effect of widespread price decreases, while the Canadian dollar appreciated sharply relative to the American dollar in July.
U.S. Trade Balance showed the goods and services deficit was $43.7 billion in July, up $0.1 billion from $43.5 billion in June, revised. July exports were $194.4 billion, $0.6 billion less than June exports. July imports were $238.1 billion, $0.4 billion less than June imports. The July increase in the goods and services deficit reflected a decrease in the goods deficit of less than $0.1 billion to $65.3 billion and a decrease in the services surplus of $0.2 billion to $21.6 billion.
The latest U.S. Non-Manufacturing ISM registered 55.3% in August, the 92nd consecutive month of growth and was up from 53.9% in July. The U.S. Non-Manufacturing Business Activity Index increased to 57.5%, 1.6 % points higher than the July reading of 55.9%, reflecting growth for the 97th consecutive month, at a faster rate in August.
Global equity markets are mainly higher: Dow +0.39%, S&P 500 +0.43%, FTSE -0.25%, DAX +0.75%, CAC +0.29%, Nikkei-0.14%, Shanghai +0.03%.
Gold prices gave up yesterdayâ€™s gains, down $11 or 0.8% currently trading at $1,333 an ounce. WTI Crude Oil prices rallied 0.9% currently trading at $49.10 a barrel.
The NZDUSD opens at 0.7141 (mid-rate) this morning.
The Kiwi traded to a low of 0.7128 last week which was the 200 moving day average target we mentioned in the Friday 25th morning update. The NZD still looks vulnerable and a break below 0.7100 opens up 0.7000 â€“ last tested on the 24th May.
U.S. Total Non-Farm Payroll Employment increased by 156,000 in August, below the median estimate of 180,000 and the unemployment rate was little changed at 4.4%. Average hourly earnings rose 0.1%.
U.S. August Purchasing Managersâ€™ Index (PMI) registered 58.8%, an increase of 2.5% from the July reading of 56.3%. Economic activity in the manufacturing sector expanded in August, and the overall economy grew for the 99th consecutive month. The New Orders Index registered 60.3%, a slight decrease from the July reading of 60.4%
U.S. University of Michigan Consumer Sentiment Index climbed to 96.8 in August from July as consumers remained optimistic about their personal financial conditions, although confidence was not quite as strong as economists had estimated. The Sentiment Index has been higher during the first eight months of 2017 than in any year since 2000.
The rate of expansion in the UK manufacturing sector accelerated again in August. This was highlighted by the seasonally adjusted IHS Markit/CIPS PMI posting 56.9, up from 55.3 in July, to its second highest level in over three years.
Global equity markets are higher: Dow +0.18%, S&P 500 +0.20%, FTSE +0.11%, DAX +0.72%, CAC +0.74%, Nikkei +0.23%, Shanghai +0.19%.
Gold prices are slightly higher currently trading at $1,324 an ounce. WTI Crude Oil prices rose 0.4% trading at $47.29 a barrel.
The NZDUSD opens at 0.7178 (mid-rate) this morning.
The Kiwi failed to sustain its steady overnight recovery of the 0.7200 handle after yesterday afternoonâ€™s downbeat NZ business confidence numbers, and starts Friday down 0.75% from Mondayâ€™s open.
U.S. Initial Claims for the week ending 26 August was 236,000, an increase of 1,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 234,000 to 235,000. The 4-week moving average was 236,750. Claims have now been below 300,000, a threshold associated with a robust labor market, for 130 consecutive weeks. That is the longest such stretch since 1970, when the labor market was smaller.
U.S. consumer spending rose slightly less than expected in July and annual inflation increased at its slowest pace since late 2015, which could bolster expectations that the Federal Reserve will delay raising interest rates until December.
U.S. Personal income increased $65.6 billion (0.4%) in Julyaccording to estimates released overnight by the Bureau of Economic Analysis. Disposable Personal Income (DPI) increased $39.6 billion (0.3%) and Personal Consumption Expenditures (PCE) increased $44.7 billion (0.3%). Real DPI increased 0.2% in July and Real PCE increased 0.2%. The PCE price index increased 0.1%.
Canada's economy unexpectedly accelerated in Q2 to 4.5 % annualized pace amid the biggest binge in household spending since the last recession. Economists had anticipated a 3.7% rise in GDP. The surge in growth should help cement the chances the Bank of Canada will continue raising interest rates in coming months as the nationâ€™s economy nears full capacity.
Major data releases tonight includes: U.S. Unemployment rate, U.S. Non-Farm Employment change, U.S. Average Hourly Earnings, and U.S. ISM Manufacturing.
Global equity markets are higher again except China: Dow +0.29%, S&P 500 +0.61%, FTSE +0.89%, DAX +0.44%, CAC +0.58%, Nikkei 0.72%, Shanghai -0.08%.
Gold prices are sharply higher currently trading at $1,321 an ounce. WTI Crude Oil prices surged a big figure higher, up 2.3% trading at $47.10 a barrel.