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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.
The NZDUSD opens at 0.7197 (mid-rate) this morning.
The Kiwi is lower after better than expected U.S. GDP and Jobs data.
U.S. Private Sector employment increased by 237,000 jobs from July to August, well ahead of the 185,000 market expectation. The release comes two days ahead of the government's closely watched nonfarm payrolls report. Private payrolls for August jumped at their fastest pace in five months thanks in part to strong gains in construction and manufacturing jobs.
According to the second estimate, U.S. GDP increased at an annualised rate of 3.0% for the second quarter of 2017. This was an increase from the first estimate of 2.6% and above the consensus forecast of 2.7% while the economy expanded at the fastest pace since the first quarter of 2015. There was an upward revision to personal consumption expenditure growth to 3.3% from 2.8% previously. Investment made a positive contribution to the quarter with strong growth in non-residential capital spending. There was also a slightly larger net positive contribution from trade for the quarter.
U.S. commercial crude oil inventories decreased by 5.4 million barrels from the previous week. U.S. crude oil refinery inputs averaged over 17.7 million barrels per day during the week ending August 25, 2017, 264,000 barrels per day more than the previous weekâ€™s average. Refineries operated at 96.6% of their operable capacity last week.
Canada's current account deficit (on a seasonally adjusted basis) widened by $3.4 billion in the second quarter to $16.3 billion, as the deficit on international trade in goods expanded
In August 2017, the Swiss Economic Barometer fell by 3.9 points to 104.1, but still well above the long term average. The reading indicates the Swiss economy should continue to grow at above average rates.
Global equity markets are higher except China: Dow +0.13%, S&P 500 +0.38%, FTSE +0.38%, DAX +0.47%, CAC +0.49%, Nikkei 0.74%, Shanghai -0.74%.
Gold prices are up 0.2% trading at $1,308 an ounce. WTI Crude Oil prices are sharply lower, down 1.0% trading at $46.02 a barrel.
The NZDUSD opens at 0.7259 (mid-rate) this morning.
The NZD has outperformed all but the AUD in the last 24 hours. Investors looked to hedge against geopolitical risks and Hurricane Harvey. There was broad USD selling and Gold rallied $21. EURUSD traded to 1.1984 just shy of the psychological 1.2000 resistance level.
The annual growth rate of the broad monetary aggregate M3 for the Euro-area decreased to 4.5% in July 2017, from 5.0% in June. The annual growth rate of the narrower aggregate M1, which includes currency in circulation and overnight deposits, decreased to 9.1% in July, from 9.7% in June. The annual growth rate of adjusted loans to households stood at 2.6% in July, unchanged from the previous month.
The U.S. goods trade deficit increased in July as exports fell, suggesting that trade would make a modest contribution to economic growth in the third quarter. The goods trade gap increased 1.78% to $65.1 billion last month. Exports declined 1.3%, weighed down by an 8.0% tumble in shipments of motor vehicles. There were also decreases in exports of consumer goods last month.
Despite the wider deficit, economists expect trade to be positive to growth in the third quarter. U.S. exports are being helped by a rebound in global growth and a weaker dollar.
Global equity markets are mainly lower: Dow -0.11%, S&P 500 -0.04%, FTSE -0.08%, DAX -0.37%, CAC -0.48%, Nikkei -0.01%, Shanghai +0.93%.
Gold prices have rallied strongly up $21 or 1.6% trading at $1,310 an ounce. WTI Crude Oil prices are sharply lower, down 2.3% trading at $46.69 a barrel.
The NZDUSD opens at 0.7231 (mid-rate) this morning.
The NZD is the worst performing of the G10 currencies, the currency was hit hard yesterday and has continued to struggle overnight. The catalyst for the fall was yesterdayâ€™s pre-election fiscal update where forecasts for both growth and budget surpluses were lowered.
Weak equity markets as well as a dip in US interest rates has seen investors flock to safe-havens with the JPY and to a lesser extent the CHF our performing.
The EUR has also performed well overnight after Euro-zone manufacturing data printed ahead of expectations with both the flash Composite Output Index along with the flash Purchasing Managers' Index both climbing in August. The Composite Output Index rose to a two month high of 55.8 following Julyâ€™s 55.7 result, while the flash Purchasing Managers' Index also posted a two month high rising to 57.4 up from 56.6 in July.
US new home sales for the month of July unexpectedly plummeted, down 9.4% to an annual rate of 571k following an upwardly revised June result of 630k. The sharp fall came as a surprise to economists who had forecast the sales to edge up to 610k from the previously reported 610k in June.
The U.S. Energy Information Administration (EIA) reported a 3.3million barrel fall in crude oil inventories for the week ending 18th August, the fall was in line with expectations.
This morningâ€™s trade surplus is expected to fall by $200 million in July after posting a $242 million surplus in June, the data will be released at 10:45am.
Global equity markets are mixed - Dow -0.32%, S&P 500 -0.36%, FTSE +0.01%, DAX -0.45%, CAC -0.32%, Nikkei +0.26%, Shanghai -0.08%.
Gold prices has edged higher, up 0.3% trading at $1,288 an ounce .WTI Crude Oil prices continue to push higher, up 1.6% trading at $48.39 a barrel.
The NZDUSD opens at 0.7278 (mid-rate) this morning.
The USD has reversed yesterdayâ€™s fall and has been the strongest performer of the G10 currencies. In the absence of any US economic data releases the move appears to be driven by weaker than expected German economic sentiment.
German economic confidence in August fell for the third consecutive month, and now sits at a 10 month low. The ZEW Indicator of Economic Sentiment now sits at 10 a sharp fall from July's 17.5 reading. Economists had expected the indicator to pull back to 14.8.
The UK Office for National Statistics reported UK public sector net borrowing in July turned to surplus for the first time since 2002. The report which excludes public sector banks recorded a GBP0.2 billion surplus. Expectations were for borrowing to increase by GBP1 billion for the month.
Again we are without any economic drivers during our trading day, with investors' attention likely to be focused of ECB President Draghiâ€™s speech later this evening along with overnight European and US PMI data releases.
Global equity markets broadly higher - Dow +0.73%, S&P 500 +0.81%, FTSE +0.86%, DAX +1.36%, CAC +0.87%, Nikkei -0.05%, Shanghai +0.10%.
Gold prices have given back yesterday's gains, down 0.6% trading at $1,284 an ounce .WTI Crude Oil prices are up 1% trading at $47.61 a barrel.
The NZDUSD opens at 0.7325 (mid-rate) this morning.
The NZD has traded tight ranges against all its rivals, with the USD starting off the week on the back foot. In the absence of any tier one economic data investors are once again focusing on growing tensions between the US and North Korea. In reaction to the annual joint US-South Korean military exercises, an official North Korean government newspaper warned that these exercises could lead to an "uncontrollable phase of a nuclear war."
Today, in fact the week ahead has very little in the way of economic data releases with global central bankers gathering at the annual Jackson Hole conference. The Jackson Hole event provides an opportunity for central bankers to discuss monetary policy with investors waiting for Fed Chair Janet Yellenâ€™s economic policy symposium at the end of the week before adding to their positions.
Global equity markets are mixed - Dow +0.02%, S&P 500 +0.01%, FTSE -0.07%, DAX -0.82%, CAC -0.52%, Nikkei -0.40%, Shanghai +0.56%.
Gold prices have strengthened, up 0.6% trading at $1,292 an ounce .WTI Crude Oil prices have fallen sharply, down 2.9% trading at $47.12 a barrel.
The NZDUSD opens at 0.7313 (mid-rate) this morning.
The NZD along with other commodity linked currencies had a solid end to the trading week on the back of rising commodity prices and an increase in risk appetite following the resignation of Trumpâ€™s controversial chief strategist Steve Bannon.
Base metal prices continue to trade at multi year highs and crude oil futures surged 3% on Friday after the EIA reported a fall in the US rig count. The report showed the US rig count fell by 3 last week following on from a decrease of 5 during the previous week.
Consumer sentiment in the US for the month of August showed significant improvement with the University of Michigan index rising from 93.4 in July to 97.6 in August. The index had been expected to edge up to 94.0.
The European Central Bank reported a fall in their current account surplus in June with the report showing the surplus fell to EUR21.2B down from EUR30.5B in May. This is the lowest it has been since August 2014.
The week ahead offers little in the way of local economic data releases with Thursdayâ€™s trade balance and todayâ€™s visitor arrivals and credit card spending likely to have little impact on the currency.
Global equity markets closed out the week in negative territory - Dow -0.35%, S&P 500 -0.18%, FTSE -0.86%, DAX -0.31%, CAC -1.16%, Nikkei -1.18%, Shanghai +0.01%.
Gold prices fell 0.4% on Friday closing out the week at $1,284 an ounce. WTI Crude Oil prices spiked 3.0% on Friday pushing prices up to $48.51 a barrel, for a weekly loss of 0.6%.
The NZDUSD opens at 0.7317 (mid-rate) this morning.
This morning's FOMC meeting minutes have shown there is a growing split between policy makers on the timing of future interest rate hikes, with some officials arguing that the FOMC â€œcould afford to be patient under current circumstances in deciding when to increase the federal funds rate furtherâ€. Inflation in the US has continued to lag the Fedâ€™s 2% target with some voting members now believing future hikes should be on hold until "incoming information confirmed that the recent low readings on inflation were not likely to persist". The one thing members seem to agree on is the plan for the Fed to reduce its USD4.5t balance sheet "relatively soon". Many economists now expect the Fed to announce a road map to reducing the balance sheet at their September meeting.
Prior to the FOMC meeting minutes the USD had come under pressure after the US Department of Commerce reported housing starts for the month of July fell by 4.8% to annual rate of 1.155m. The report also showed building permits for the same month decreased by 4.1% from Juneâ€™s print.
There was better economic data out of the UK overnight which will have pleased BOE Gov Carney, with the unemployment rate edging down to 4.4% in Q2 down from 4.5% in Q1. Economists had forecast an unchanged result. Average earnings in the UK also exceeded economistsâ€™ estimates increasing by 2.1% vs. expectations of a 1.8% rise.
This morningâ€™s PPI data release is due out at 10:45 while direction for the NZDAUD cross rate should be driven by this afternoonâ€™s Australian employment report.
European and US equity markets are positive - Dow +0.12%, S&P 500 +0.21%, FTSE +0.67%, DAX +0.71%, CAC +0.71%, Nikkei -0.12%, Shanghai -0.15%.
Gold prices have strengthened, up 0.8% trading at $1,282 an ounce .WTI Crude Oil prices have extended their fall, down 1.5% trading at $46.86 a barrel.
The NZDUSD opens at 0.7238 (mid-rate) this morning.
A combination of broad USD strength and a fall in dairy prices has seen the NZD underperform overnight. The NZD is the weakest of the G10 currencies with the NZDUSD currently trading at 5-week lows.
This morning the latest Global Dairy Trade (GDT) auction resulted in a second consecutive fall in the index. The overall price index decreased by 0.4% following on from a 1.6% fall a fortnight ago, volumes also decreased, down 1.6% with a total of 32,260 tonnes selling under the hammer.
This morningâ€™s US retail sales result for the month of July exceeded expectations sparking a USD rally. The Commerce Department report showed retail sales increased by 0.6% in July while retail sales for the month of June were upwardly revised to 0.4% from a previously reported 0.2% fall.
Inflation in the UK for the month of July came up shy of economistsâ€™ forecasts, with consumer prices increasing by 2.6% in July, less than the 2.7% result forecast by economists. The result puts a further dent in the hopes that the BOE will be in a position to raise interest rates anytime soon.
A lack of economic data during our trading day will see investors focus on tomorrow mornings FOMC meeting minutes before adding to their positions.
Global equity markets remain mixed - Dow -0.05%, S&P 500 -0.06%, FTSE +0.41%, DAX +0.10%, CAC +0.36%, Nikkei +1.11%, Shanghai +0.43%.
Gold prices have edged lower, down 0.6% trading at $1,272 an ounce .WTI Crude Oil prices have slipped lower, down 0.6% trading at $47.55 a barrel.
The NZDUSD opens at 0.7295 (mid-rate) this morning.
The USD has started the week on the front foot as geopolitical tension between the US and North Korea eases. Assisted by yesterdayâ€™s standout retail sales report the NZD has held up well.
New Zealand retail sales volumes were up 2% in the second quarter boosted by both the World Masters Games and the Lions rugby tour. The strong result was well ahead of forecasts and follows on from a 1.5% increase in the first quarter.
Yesterday the National Bureau of Statistics report showed China's industrial output and retail sales expanded at a slower rate than forecast. Industrial production for the month of July increased by 6.4%y/y following a 7.6% increase in June and short of the expected 7.1% print. Retail sales growth also slowed, easing to 10.4% in July following an 11% increase in June and just shy of the forecast 10.8% increase.
Crude oil futures tumbled over night after the EIA reported US crude oil production continues to remain at two-year highs and Chinaâ€™s crude imports fell to a 7mth low.
This afternoons RBA monetary policy statement looks to be todayâ€™s highlight during our trading day while overnight, tonight UK inflation data and US retail sales should dictate direction.
Global equity markets with the exception of the Nikkei are higher - Dow +0.67%, S&P 500 +1.06%, FTSE +0.60%, DAX +1.26%, CAC +1.20%, Nikkei -0.49%, Shanghai +0.90%.
Gold prices are down 1.1% trading at $1,280 an ounce .WTI Crude Oil prices have plunged, down 2% trading at $47.83 a barrel.
The NZDUSD opens at 0.7285 (mid-rate) this morning.
The Kiwi is lower again overnight as tension mount over North Korea. The Japanese Yen and gold are the biggest benefactors from safe haven flows.
The NZD has traded 169 point range this week or 2.2% and opens just 0.5% from the lows.
In the week ending August 5, the advance figure for seasonally adjusted U.S. Initial Claims was 244,000, an increase of 3,000 from the previous week's revised level.
The U.S. Producer Price Index (PPI) for final demand declined 0.1% in July, seasonally adjusted, the U.S. Bureau of Labor Statistics reported. Final demand prices inched up 0.1% in June and were unchanged in May.
In the 3 months to June 2017, the U.K. Index of Production was estimated to have decreased by 0.4% compared with the 3 months to March 2017, due mainly to a fall of 0.6% in manufacturing.
UK's total trade deficit (goods and services) widened by Â£2.0 billion between May and June 2017 to Â£4.6 billion, due to increases in imports of both goods and services
The U.S. government reported a smaller deficit for Julycompared to the previous year as a result of an increase in tax receipts and less spending on healthcare. The deficit of $43 billion last month compared to a deficit of $113 billion in the year-earlier period, the Treasury Department said in its monthly budget statement. Economists polled by Reuters had forecast the Treasury reporting a $73 billion deficit last month.
Global equity markets move lower again as Nth Korean tensions mount: Dow -0.49%, S&P 500 -0.91%, FTSE -1.44 %, DAX -1.15%, CAC -0.59%, Nikkei -0.05%, Shanghai -0.42%.
Gold prices are up $10 or 0.8% trading at $1,285 an ounce .WTI Crude Oil prices have dropped 1.6% trading at $48.58 a barrel.
The NZDUSD opens at 0.7328 (mid-rate) this morning.
Mounting geopolitical tensions between the US and North Korea has seen investors move away from riskier assets such as equities to safe havens like gold. Gold futures which are currently up 1.6% posting their largest one day gain since May.
On the currency front safe-haven demand continues to support both the Swiss franc and the Japanese Yen, with the yen the strongest performer of the G10 currencies over the past 24hrs.
This morning sees an end to the economic data drought with the release of the Reserve bank monetary policy statement. In Governor Wheeler's final statement, investors are expecting very little, if at all any change in the Banks current policy, with Gov Wheeler again expected to confirm monetary policy will remain "accommodative for a considerable period".
Overnight the Energy Information Administration (EIA) reported US oil inventories fell by 6.5m barrels to 1.15b barrels. The fall was far greater than the forecast 2.6m barrel decrease.
Global equity markets are a sea of red - Dow -0.34%, S&P 500 -0.33%, FTSE -0.59%, DAX -1.12%, CAC -1.40%, Nikkei -1.29%, Shanghai -0.19%.
Gold prices are up 1.6% trading at $1,275 an ounce .WTI Crude Oil prices have edged higher, up 0.4% trading at $49.38 a barrel.
The NZDUSD opens at 0.7325 (mid-rate) this morning.
The NZD has once again underperformed in what has been a fairly quiet night for both currency and equity markets. The USD strengthened against the other majors after the JOLTS job opening figures which came in above market expectations. The report showed that 6.16m job openings were created in August. The figure represents an increase of 461k and takes job openings to a new record high.
Germanyâ€™s trade surplus for June increased to a seasonally adjusted EUR 21.2B from EUR 20.3B in May, with the Destatis report showing exports unexpectedly declined by a calendar and seasonally adjusted 2.8% in June following on from a 1.5% increase in May. Imports were also down for the first time in four months, declining by 4.5%.
Investors will today look to this afternoons China inflation data for direction, while the NZD is likely to come under further pressure ahead of tomorrow morningâ€™s RBNZ monetary policy statement.
Global equity markets with the exception on the Nikkei are positive - Dow +0.05%, S&P 500 +0.10%, FTSE +0.14%, DAX +0.28%, CAC +0.21%, Nikkei -0.30%, Shanghai +0.07%.
Gold prices have edged down 0.2% trading at $1,258 an ounce .WTI Crude Oil prices are little changed trading at $49.17 a barrel.
The NZDUSD opens at 0.7355 (mid-rate) this morning.
In a delayed reaction to yesterdayâ€™s RBNZ inflation expectations the NZD has weakened against all its trading rivals and is the worst performing of the G10 currencies over the past 24h hrs.
The latest quarterly RBNZ survey showed those surveyed now see annual inflation at 1.77%, down from 1.92% in one year, while the headline two year expectation has been dialled back from 2.17% to 2.09%. Q2 inflation as reported last month sits at 1.7%.
Overnight German industrial production unexpectedly decreased in June with the Destatis report showing industrial output decreased by 1.1%m/m, following an upwardly revised 1.2% increase in May. The June result is the first fall in production this year and surprised economists who had forecast a small increase of 0.2%.
With very little in the way of economic data releases, ahead of Thursdayâ€™s RBNZ monetary policy statement the NZD is likely to trade tight ranges with a bias to the downside.
Global equity markets with the exception on the DAX have edged higher - Dow +0.10%, S&P 500 +0.10%, FTSE +0.27%, DAX -0.33%, CAC +0.09%, Nikkei +0.52%, Shanghai +0.53%.
Gold prices are little changed trading at $1,258 an ounce .WTI Crude Oil prices have edged lower, down 0.7%, trading at $49.22 a barrel.
The NZDUSD opens at 0.7409 (mid-rate) this morning.
The USD rebounded late on Friday following the release of this monthâ€™s US non-farm payrolls job report. The keenly awaited report showed employment in the US for the month of July increased by 209k jobs after spiking by an upwardly revised 231k jobs in June. The result was far better than economistsâ€™ forecasts, who had predicted employment to increase by 183k jobs in July following the 222k increase in jobs previously reported for June. The unemployment rate edged lower, down 0.15 to 4.3% from 4.4% in June.
The US Commerce Department trade balance report showed the trade deficit narrowed more than expected in June, with exports up 1.2% and imports edging down by 0.2%. The trade deficit narrowed to $43.6b in June from $46.4b in May. Economists had expected the deficit to narrow to $45b.
Itâ€™s a big data week for the NZD starting with this afternoonâ€™s quarterly inflation expectations due to hit the tapes at 3:00pm while on Thursday morning retiring Reserve Bank Governor Graeme Wheeler will deliver his final monetary policy statement before deputy-governor Grant Spencer steps in as care-taker for six months while a long term replacement is found.
Global equity markets closed out the week mixed - Dow +0.03%, S&P 500 +0.18%, FTSE +0.49%, DAX +1.18%, CAC Closed%, Nikkei -0.38%, Shanghai -0.33%.
Gold prices fell 0.9% on Friday closing out the week at $1,257 an ounce .WTI Crude Oil prices gained 1.4% on Friday pushing prices up to $49.58 a barrel for a small weekly loss.
The NZDUSD opens at 0.7447 (mid-rate) this morning.
The NZD is modestly higher overnight against the USD having traded a 138 point or 1.8% range this week. The Kiwi has settled in the middle of the week's range having lost the 0.7500 handle.
Headlining the data releases overnight was the Bank of England which kept interest rates at a record low once againand trimmed its forecasts for growth in 2017 and 2018 as the impact of Brexit weighed on households' spending power.
"The Bank of England's Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. At its meeting ending on 2 August 2017, the MPC voted by a majority of 6-2 to maintain Bank Rate at 0.25%."
UK Services Sector PMI Business Activity Index picked up to 53.8 in July, from 53.4 in June, to remain above the 50.0 no-change value for the twelfth month running. Optimism regarding the business outlook remains subdued, however Employment numbers rose at the fastest pace since January 2016.
In the week ending July 29, the advance figure for seasonally adjusted U.S. Initial Claims was 240,000, a decrease of 5,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 244,000 to 245,000. The 4-week moving average was 241,750
The seasonally adjusted IHS Markit U.S. Services Business Activity Index registered 54.7 in July, up from 54.2 in June. July survey data signalled a solid expansion in business activity among US service providers. New orders received by firms increased at the fastest pace for two years, which in turn contributed to a stronger rise in backlogs of work.
Orders at U.S. factories increased in June as demand surged for aircraft. Factory Orders increased 3% the gains largely thanks to a massive 131% jump in orders for civilian aircraft, a category that can be volatile on a monthly basis. Excluding the transportation sector that includes aircraft, factory orders slipped 0.2% in June.
Overnight data releases tonight include: US Trade Balance, US Unemployment rate, US Non-farm Employment Change, Canadian Unemployment rate, Trade balance and Employment change.
Global equity markets are mixed: Dow +0.04%, S&P 500 -0.22%, FTSE +0.85%, DAX -0.22%, CAC +0.46%, Nikkei -0.25%, Shanghai -0.37%.
Gold prices given back yesterday's small gain, down 0.2% trading at $1,269 an ounce .WTI Crude Oil prices are up 1%, trading at $49.42 a barrel.
The NZDUSD opens at 0.7435 (mid-rate) this morning.
After trading back towards 0.7400 against the USD following yesterdayâ€™s disappointing employment report the NZD has benefitted from USD weakness after private sector employment in the US failed to meet economistsâ€™ forecasts.
The ADP Research Institute report showed private sector employment increased by 178k jobs in July following on from Juneâ€™s 191k result. Economists had forecast an increase of 185K jobs for July. The USD in reaction to the report plummeted to its lowest level since January 2015 versus the euro, and to its lowest level against the GBP since September 2016.
Crude oil prices have bounced back after initially and unexpectedly falling following the Energy Information Administration (EIA). The latest weekly report showed crude oil inventories fell by 1.5m barrels in the week ended July 28. Market analysts' had expected crude inventories to decline by 3m barrels.
With only second tier data due out during our trading day, investors will turn their heads towards tonightâ€™s BOE monetary policy statement and Friday nightsâ€™ non-farm payrolls for further direction.
Global equity markets are mixed - Dow +0.20%, S&P 500 -0.11%, FTSE -0.16%, DAX -0.57%, CAC -0.39%, Nikkei +0.47%, Shanghai -0.23%.
Gold prices given back yesterdayâ€™s small gain, down 0.2% trading at $1,269 an ounce .WTI Crude Oil prices are up 1%, trading at $49.42 a barrel
The NZDUSD opens at 0.7471 (mid-rate) this morning.
The NZD has edged lower against the majority of its rivals following a slight fall in dairy prices, while further direction for the NZD will be dictated by this morningâ€™s quarterly employment report. . Economists are currently predicting employment to increase by 0.7% with the rate of unemployment expected to edge down 0.1% from 4.9% to 4.8%.
This morningâ€™s Global Dairy Trade (GDT) resulted in a 1.6% fall in the index following a 0.2% increase at the previous auction a fortnight ago. Skim milk powder and butter prices fell 3% and 4.9% respectively while whole milk powder prices increased by 1.3% following a 0.3% fall previously.
Overnight US data releases again sent mixed messages to the market with personal income growth, and construction spending falling short of economistsâ€™ estimates, while manufacturing prices increased to 62 from 55, the biggest one-month increase this year. The fall in construction spending (down 1.3%) surprised economists who had forecast spending to increase by 0.4%.
The GBP received a boost overnight, helped higher after the manufacturing sector showed an unexpected pick-up in July. The Purchasing Managers' Index spiked to 55.1 in July, higher than the 54.3 recorded in June and well ahead of the forecast 54.4 reading.
Crude oil prices have fallen after a report showing OPECâ€™s July crude oil exports increased by 210k Barrels a day to 32.9M barrels a day was released. The UAE led the increase, shipping 326K barrels per day more in July than in June.
Global equity markets are broadly higher- Dow +0.37%, S&P 500 +0.25%, FTSE +0.70%, DAX +1.10%, CAC +0.65%, Nikkei +0.30%, Shanghai +0.60%.
Gold prices have edged higher, up 0.3% trading at $1,272 an ounce .WTI Crude Oil prices have fallen, down 1.8% trading at $48.93 a barrel.
The NZDUSD opens at 0.7507 (mid-rate) this morning.
The big mover over the past 24hrs has been the EUR with better than expected economic data increasing the chances that the European Central Bank (ECB) will be in a position to wind down its quantitative easing (QE) program later in the year.
US economic data releases delivered mixed results for the USD with better than expected pending home sales countered by a larger than expected fall in the Chicago PMI.
Pending home sales for the month of June bounced back from Mayâ€™s shock fall with the National Association of Realtors report showing sales were up 1.5% to 110.2 in June, after falling 0.7% to 108.6 in May. The index had been forecast to rise 1%.
The Chicago business barometer plummeted to 58.9 in July after peaking at 65.7 in June. The fall in business activity was greater than expected with economists forecasting the index to drop to 61.0. A breakdown of the data showed new orders index fell by 11.6 points to 60.3 while the production index lost 6.9 points to 60.8.
Euro-zone inflation for the month of July came in unchanged from Juneâ€™s 1.3% reading according to the Eurostat flash data report. The result was in line with expectations.
Germanyâ€™s retail sales for the month of June surged 1.1% following Mayâ€™s 0.5% increase. The result was well ahead of expectations with economists forecasting sales to inch up by 0.1%.
In the absence of any NZ economic data releases investors are likely to turn their attention to this afternoons Reserve Bank of Australiaâ€™s monthly monetary policy statement.
Global equity markets remain mixed - Dow +0.43%, S&P 500 +0.02%, FTSE +0.05%, DAX -0.37%, CAC -0.73%, Nikkei -0.17%, Shanghai +0.61%.
Gold prices are unchanged trading at $1,268 an ounce .WTI Crude Oil prices have edged higher, up 0.2% at $49.81 a barrel.
The NZDUSD opens at 0.7500 (mid-rate) this morning.
The NZDUSD pushed back above 0.7500 late on Friday with the USD continuing to struggle following the US Federal Reserveâ€™s dovish monetary policy statement.
The US Commerce Department Q2 gross domestic product (GDP) report, showed economic activity expanded by 2.6% in the second quarter following a downwardly revised 1.2% increase in Q1. First quarter growth had previously been reported at 1.4% while the Q2 result fell in line with economistsâ€™ estimates.
Consumer sentiment in the US for the month of July was unexpectedly revised higher with the University of Michigan index recording a final reading of 93.4 slightly better than the preliminary reading of 93.1.
Inflation in Germany unexpectedly rose to a 3mth high in July with consumer prices increasing by 1.7% annually. Economists had expected to see prices edge down from Juneâ€™s 1.6% increase to 1.5%.
Consumer confidence in the United Kingdom has continued to fall, with the Gfk index decreasing by 2pts to -12 in July. This is the lowest the index has been since immediately after the Brexit vote.
The domestic highlight for the NZD this week will be Wednesdayâ€™s employment report with economists currently expecting employment to increase by 0.7% with the unemployment rate to edge down from 4.9% to 4.8%.
Global equity markets closed out the week mixed - Dow +0.15%, S&P 500 -0.13%, FTSE -1.00%, DAX -0.40%, CAC 0.00%, Nikkei -0.60%, Shanghai +0.11%.
Gold prices edged higher on Friday closing out the week at $1,268 an ounce .WTI Crude Oil prices gained 1.4% on Friday pushing prices up to $49.71 a barrel for a weekly gain of 8.6%.
The NZDUSD opens at 0.7489 (mid-rate) this morning.
The NZDUSD has traded a 1.8% or 132 point range in the past 24 hours but has slipped 60 odd points from the highs to open under 0.7500 this morning
The USD was sold heavily in the wake of the FOMC statement as the market has ruled out a September rate hike and there is now a 50% possibility that the Fed may hike in December.
U.S. Initial jobless claims in the period running from July 16 to July 22 increased by 10,000 to a seasonally adjusted 244,000. The number of Americans who applied for unemployment benefits rose in late July but remained near the lowest level in decades, mirroring a red-hot labour market that shows little sign of cooling.
Core Durable goods were 0.2% up in June compared with May but that was short of the 0.4% increase expected. Durable Goods Orders were up 6.5% better than the 3.5% market expectation. The U.S. economy is experiencing steady but slower growth in business investment as orders for capital equipment eased last month following a May increase that was bigger than previously reported.
Overnight data releases tonight include US Advance GDP, Canadian GDP, University of Michigan U.S. revised Consumer Sentiment and Inflation Expectations, and FOMC Member Kashkari speaks at a Town hall event in Minnesota
Global equity markets are mixed - Dow +0.18%, S&P 500 -0.33%, FTSE -0.12%, DAX -0.76%, CAC -0.06%, Nikkei +0.15%, Shanghai +0.06%.
Gold prices continued higher, up $6 or 0.5% trading at $1,260 an ounce .WTI Crude Oil prices are up 0.8% at $49.01 a barrel.
The NZDUSD opens at 0.7416 (mid-rate) this morning.
The NZD is modestly lower against all the majors except the Japanese Yen overnight. The JPY was the big mover, weakening 0.9% against the US Dollar testing just shy of 112.00
HIFX is hosting a breakfast this morning in Auckland, with RBNZ Assistant Governor John McDermott speaking about monetary policy, economic trends and how they help implement the bankâ€™s flexible inflation targeting framework.
U.S. Consumer Confidence index rose in July to the second highest level in 16 years as Americans shrugged off all the political drama and took heart in the best labour market in a decade. The index rose to 121.1 this month from 117.3 in June. The increase exceeded the 116.9 forecast of economists.
U.S. House Price Index (HPI) is up 0.4% in May from April seasonally adjusted. The previously reported 0.7% increase in April was revised downward to a 0.6% increase. From May 2016 to May 2017, house prices were up 6.9%.
U.S. Major Metro area home prices, an index which covers home prices in 20 cities across the U.S. was up 5.7% in May year over year, a decline from Aprilâ€™s 5.8%.
The U.S. Fifth District Manufacturers composite index rose from 11 in June, to 14 in July, the result of a slight increase in the measures of new orders and employment.
Thursdayâ€™s FOMC monetary policy statement is the key focus for the remainder of the week.
Global equity markets are higher with only Asia the exception: Dow 0.52%, S&P 500 +0.34%, FTSE +0.77%, DAX +0.45%, CAC +0.65%, Nikkei -0.10%, Shanghai -0.21%.
Gold prices are down $4 or 0.3% trading at $1,250 an ounce .WTI Crude Oil prices have surged higher, up 3.3% at $47.86 a barrel.
The NZDUSD opens at 0.7352 (mid-rate) this morning.
The NZDUSD continued to push higher on Friday closing at 0.7454 a level last seen in September 2016, with Tuesdayâ€™s disappointing inflation report all but forgotten the NZD has since made steady gains against all of its rivals.
The big mover on Friday was the AUD with the NZD surging back above 0.9400 as comments from RBA Deputy Governor Guy Debelle led to an AUD â€œsell offâ€. Dr Debelle while speaking at a business lunch in Adelaide told guests that "No significance should be read into the fact the neutral rate was discussed at this particular meeting," and that the fact the cash rate was significantly below the RBA's theoretical neutral rate was not that unusual. It has been that way since 2012. The NZDAUD cross rate had traded as low as 0.9215 following Tuesdayâ€™s CPI data release.
The week ahead offers very little in the way of domestic economic data releases with direction for the NZD likely to be dictated by overseas developments, the pick of which should be Wednesdayâ€™s Australian inflation report followed overnight by UK GDP and the latest FOMC monetary policy statement.
Global equity markets closed out the week broadly lower - Dow -0.15%, S&P 500 -0.03%, FTSE -0.47%, DAX -1.66%, CAC 0.00%, Nikkei -0.22%, Shanghai -0.21%.
Gold prices were up 2% over the course of the week closing on Friday at $1,254 an ounce .WTI Crude Oil prices were, down 1.5% on Friday and down 2% over the course of the week to close on Friday at $45.77 a barrel.
The NZDUSD opens at 0.7407 (mid-rate) this morning.
The NZD traded an 81 point range overnight (0.7334 to 0.7415) and opens above 0.7400. The NZD has gained 62 points or 0.8% against the USD from Mondayâ€™s open of 0.7345
The Bank of Japan at their press conference delivered... nothing - no change. However, most critically, the BOJ admitted defeat of deflation and delayed the timing of reaching their 2% inflation goal to around FY2019.
In May 2017 the current account of the Euro Area recorded a surplus of â‚¬30.1 billion. In the financial account, combined direct and portfolio investment recorded net acquisitions of assets of â‚¬100 billion and net incurrences of liabilities of â‚¬88 billion.
The European Central Bank (ECB) held interest rates steady overnight, amid speculation that the bank will start to scale back its ultra-loose monetary policy in the fall. Many market participants expect that improved economic growth in the euro zone will cause a shift away from years of easy money, underlined by interest rates being held at 0.00 percent for seventeen consecutive months.
U.S. Jobless claims decreased by 15k to 233k, forecast was 245k. Filings for U.S. unemployment benefits last week fell to the lowest since early May, reflecting growing demand for workers in a tight job market. The level in February was the lowest since the early 1970s.
U.S. Manufacturing activity in the region continues to grow but at a slower pace, according to results from the July Manufacturing Business Outlook Survey. Firms remained generally optimistic about future growth. More than one-third of the manufacturers expect to add to their payrolls over the next six months
In the 3 months to June 2017, the quantity bought (volume) in the U.K. Retail industry is estimated to have increased by 1.5% with increases seen across all store types. The growth for Quarter 2 (Apr to June) 2017 follows a decline of 1.4% in Quarter 1 (Jan Mar) 2017, meaning we are broadly at the same level as at the start of 2017.
Global equity markets are mixed: Dow -0.04%, S&P 500 +0.07%, FTSE +0.77%, DAX -0.04%, CAC -0.32%, Nikkei +0.62%, Shanghai +0.43%.
Gold prices have edged lower, down 0.2% trading at $1,241 an ounce .WTI Crude Oil prices have pushed higher, up 2.0% at $47.20 a barrel.
The NZDUSD opens at 0.7358 (mid-rate) this morning.
Yesterdayâ€™s disappointing inflation data which saw the NZD fall sharply was all but forgotten by the early afternoon with the NZD joining all other G10 currencies in rising sharply against the USD. The news that Donald Trump and his party had once again failed to gain enough support to repeal and replace Obamacare has cast doubts over Trumpâ€™s ability to pass any new bills including his proposed tax reforms.
The AUD has been the strongest performing G10 currency surging higher following the release of the RBA meeting minutes. The Australian central bank noted the economy was improving and estimated a neutral cash rate should be 3.5%, 2% higher than where it currently sits.
This morningâ€™s GDT auction resulted in a 0.2% gain in the index following a 0.4% fall at the previous auction a fortnight ago. Whole Milk Powder prices gained 0.3% following a 2.6% increase previously. Skim milk powder prices suffered a second consecutive fall down 3.2%, while butter prices have continued to push higher up a further 3.4% at this morningâ€™s auction.
UK inflation unexpectedly slowed in June, with the Office for National Statistics reporting the inflation rate slowed to 2.6%. It was the first fall since October last year. Economists had expected inflation to remain unchanged at 2.9%.
Global equity markets have turned negative - Dow -0.29%, S&P 500 -0.03%, FTSE -0.19%, DAX -1.25%, CAC -1.09%, Nikkei -0.59%, Shanghai +0.35%.
Gold prices are up 0.7% trading at $1,243 an ounce .WTI Crude Oil prices have edged higher, up 0.7% at $46.29 a barrel.
The NZDUSD opens at 0.7316 (mid-rate) this morning.
A slow start to the week as investors await economic data releases before adding to their positions has seen the NZD trade tight ranges against all its major trading rivals. This morningâ€™s inflation report due for release at 10:45 will dictate near term direction for the NZD. Economists are forecasting Q2 CPI to edge up by 0.2% following on from a 1% increase in Q1, while the fall in oil prices during the same period could very well see the annual inflation figure fall below 2% following a 2.2% reading in Q1.
Yesterdayâ€™s China data printed ahead of expectations with gross domestic product (GDP) expanding at an annualized 6.9% in the second quarter just ahead of the forecast 6.8% result, while Industrial Production y/y surged 7.6% well above the expected 6.5% increase. Surprisingly, there was very little reaction to the data releases.
Overnight Euro-zone inflation for the month of June printed in line with expectations edging down to 1.3% (a 6mth low) following Mayâ€™s 1.4% reading.
Global equity markets are mixed - Dow +0.03%, S&P 500 +0.03%, FTSE +0.35%, DAX -0.35%, CAC -0.10%, Nikkei +0.31%, Shanghai -1.43%.
Gold prices are up 0.5% trading at $1,234 an ounce .WTI Crude Oil prices have started the week on the back foot, down 1% to $46.01 a barrel.
The NZDUSD opens at 0.7345 (mid-rate) this morning.
The USD was heavily sold on Friday losing ground against all its rivals including the NZD, following another series of disappointing economic data releases.
A lack of inflation and an unexpected fall in retail sales has raised question marks over whether the Fed will be in a position to hike rates and reduce its balance sheet later this year.
Consumer prices in the US for the month of June, which had been expected to edge higher, after declining by -0.1% in May, came in flat, while retail sales for the same period fell for the second consecutive month. Economists had expected both data releases to edge higher.
Industrial production in the US printed slightly ahead of expectations, with the Fed report showing a 0.4% (exp 0.3%) increase in June, but any hopes of a USD recovery were dashed when the University of Michigan preliminary consumer sentiment report showed the index fell to 93.1 in July after a final reading of 95.1 in June. The report had been expected to show the index edging down to 95.0.
The domestic highlight for the NZD this week will be tomorrows quarterly inflation report, while the key international data releases will be the monetary policy statements from the BOJ and the ECB due for release on Thursday afternoon and evening respectively.
Global equity markets closed out the week mixed - Dow +0.39%, S&P 500 +0.46%, FTSE -0.47%, DAX +0.08%, CAC 0.00%, Nikkei +0.09%, Shanghai +0.13%.
Gold prices were up 3% over the course of the week closing on Friday at $1,228 an ounce .WTI Crude Oil continued to push higher on Friday, increasing by 5% over the week to close on Friday at $46.54 a barrel.
The NZDUSD opens at 0.7321 (mid-rate) this morning.
The Kiwi was the best performer of the G10 currencies overnight as the market further digests Fed Chair Yellenâ€™s comments from early Thursday morning.
Federal Reserve Chair Janet Yellenâ€™s prepared testimony for her semi-annual report to Congress made clear that central bankers are struggling to understand the recent downward trend in inflation. Still, it is important to remember that the path of monetary policy depends not just on inflation, but also on unemployment. The Fed anticipates that low unemployment will push inflation back to its 2% target.
Traditionalists at the Fed, including Yellen, believe that if policy makers do not tighten pre-emptively in this environment, unemployment will undershoot its natural rate, pushing inflation above target. Initially the market interpreted her comments as a dovish turn that puts in doubt the Fedâ€™s expected policy path for the remainder of 2017 and in 2018. However, on reflection, the market has considered there will be at least one more hike in the Fed Interest rate in 2017 and 3 in 2018, and for the time being has sold the USD.
In the week ending July 8, the U.S. advance figure for seasonally adjusted initial claims was 247,000, a decrease of 3,000 from the previous week's revised level.
The U.S. Producer Price Index for final demand increased 0.1% in June, seasonally adjusted. Final demand prices were unchanged in May and rose 0.5% in April.
The U.S. Monthly Treasury Statement showed a deficit of USD 90.2 Billion.
Data releases overnight for the U.S. tonight include CPI, Core CPI, Retail Sales, Capacity Utilizaton Rate, Industrial Production, Business Inventories, Preliminary University of Michigan Inflation Expectations and Consumer Sentiment, and Industrial Production.
Global equity markets are higher except the UK: Dow +0.06%, S&P 500 +0.17%, FTSE -0.05%, DAX +0.12%, CAC +0.25%, Nikkei -+0.01%, Shanghai -+0.64%
Gold prices have are down $2 or 0.2% overnight trading at $1,218 an ounce. .WTI Crude Oil prices are up 0.7% trading at $46.02 a barrel.
The NZDUSD opens at 0.7258 (mid-rate) this morning.
Fed Chair Janet Yellen's testimony before a House committee this morning has led to a rally in US equity and treasury prices with the Dow hitting a new intraday high trading up through 21,500. The USD is putting in a mixed performance following Yellenâ€™s testimony, rising against the EUR while losing ground against the JPY, GBP and commodity-linked currencies including the NZD and AUD.
Yellenâ€™s testimony has been viewed by many investors as quite â€œdovishâ€ after Yellen commented that any subsequent interest rate increases would be gradual, and that they wouldnâ€™t need to rise much to reach a â€œneutral policy stance.â€ Yellen also confirmed that US policymakers were watching inflation very closely given its failure to pick up to the central bankâ€™s target.
The rising star overnight has been the CAD after the Bank of Canada delivered the expected interest rate hike at this morningâ€™s monetary policy meeting. The 25bps increase is the first tightening in seven years and the first step towards unwinding nearly a decade of easing.
Eurozone industrial production growth exceeded expectations in May with the Eurostat report showing Industrial output grew 1.3% m/m following a revised 0.3% rise in April.
The UKâ€™s unemployment rate fell to the lowest level in 42 years hitting 4.5% in the three months to May, the rate had been expected to remain at 4.6%. The GBP failed to rally on the back of the data release as investors focused on BOE Deputy Governor Broadbentâ€™s comments. Mr Broadbent told the press that in his opinion â€œit is a bit tricky at the moment to make a decision (to raise rates). I am not ready to do it yet".
Global equity markets remain mixed - Dow +0.64, S&P 500 +0.74, FTSE +1.19%, DAX +1.52%, CAC +1.59%, Nikkei -0.48%, Shanghai -0.17%
Gold prices have gained 0.3% overnight trading at $1,220 an ounce. .WTI Crude Oil prices have continues to rise, up 1.5% trading at $45.69 a barrel.
The NZDUSD opens at 0.7225 (mid-rate) this morning.
The NZD has been the weakest performer of the G10 currencies over the past 24hrs. The NZDUSD looked to be in danger of breaking back below 0.7200 before political headlines surrounding Donald Trump Jr and his meetings with the Russian attorney saw the USD sell-off.
Earlier this morning Donald Trump Jr released a chain of emails that led to his meeting with a Russian lawyer. The emails between Trump Jr. and publicist Rob Goldstone led to a meeting between Trump Jr and Russian lawyer Natalia Veselnitskaya. Veselnitskaya it was suggested was willing to provide information that would "incriminate" Democratic presidential nominee Hillary Clinton. Trump Jr in a statement has said â€œVeselnitskaya had no information to provide and wanted to talk about adoption policy and the Magnitsky Act."
Better than expected NAB Business Confidence out of Australia has seen the NZDAUD cross rate fall 1%. The index recorded a score of +9 up from Mayâ€™s +8 reading. Business conditions also picked up surging to +15 from +11 in the previous month.
The day ahead is once again light on data with investors likely to wait for Fed Chair Yellenâ€™s testimony before the US the House Financial Services Committee before adding to their positions. In the early hours of tomorrow morning the BOC are expected to hike interest rates, with the market fully pricing in the hike there is substantial downside risk for the Cad should the BOC decide to sit on their hands.
Global equity markets are mixed - Dow +0.1, S&P 500 -0.073, FTSE -0.55%, DAX -0.07%, CAC -0.48%, Nikkei +0.67%, Shanghai -0.30%
Gold prices have edged higher, up 0.2% trading at $1,216 an ounce. .WTI Crude Oil prices have continued to push higher up 1.2% trading at $45.03 a barrel.
The NZDUSD opens at 0.7274 (mid-rate) this morning.
In the absence of any notable economic data releases, and with investors happy to remain on the side lines ahead of Janet Yellen's semi-annual testimony before Congress later this week the currency markets have continued to trade tight ranges.
Eurozone investor confidence eased in July, with last nightâ€™s Sentix report showing investor confidence index edged down to 28.3 in July from a near 10 year high of 28.4 in June. The index had been forecast to pull back to 28.2.
Germanyâ€™s trade balance for the month of May benefitted from a 1.4% increase in exports resulting in a EUR 20.3B surplus, in line with expectations.
This afternoon Australiaâ€™s NAB business confidence data release is the only economic data of any note, but is not expected to have a major effect on the NZDAUD cross rate.
Global equity markets have turned positive - Dow +0.1, S&P 500 +0.24, FTSE +0.26%, DAX +0.46%, CAC +0.40%, Nikkei +0.76%, Shanghai -0.17%
Gold prices are unchanged at $1,212 an ounce. .WTI Crude Oil prices have edged higher up 0.6% trading at $44.49 a barrel
The NZDUSD opens at 0.7275 (mid-rate) this morning.
The USD finished the week strongly boosted by a much better than expected employment report.
The US non-farm payroll employment increased by 222k jobs in June following an upwardly revised increase of 152k jobs in May. The increases were substantially larger than forecast, with economists predicting an increase of 179K jobs in June, while May had previously reported an increase of 138K jobs in May. Despite the job growth increase, the unemployment rate edged higher, up 0.1% to 4.4% in June.
Earlier in the evening the UK Office for National Statistics reported an unexpected fall in industrial production, with the report showing, industrial output fell 0.1% m/m in May. Economists had forecast an increase of 0.4%. UK house prices also declined for the first time since January with the Markit report showing house prices edged down 0.1% in June following a 0.3% increase in May.
The JPY weakened further on Friday after the BOJ announced plans to increase its bond-buying. The move is intended to stop the recent rise in Japanese bond yields. The BOJ has set a target of keeping the 10-year JGB yield at zero.
Despite a falling oil price the CAD strengthened on the back of another strong employment report fuelling expectation that the BOC will hike rates \at their July 12th meeting.. The report showed employment increased by 45.3k for June following a 54.5K increase in May and well ahead of the forecast 11.4K gain.
With very little in the way of domestic data releases this week investors are likely to focus on Fed Chair Yellenâ€™s testimony to the US Congress and Senate and the BOCâ€™s monetary policy report, both due for release in the early hours of Friday morning.
Global equity markets closed out the week mixed - Dow +0.44%, S&P 500 +0.64%, FTSE -0.51%, DAX +0.06%, CAC -0.14%, Nikkei -0.33%, Shanghai +0.17%.
Gold prices fell 1% on Friday closing out the week $1,212 an ounce .WTI Crude Oil plunged on Friday, losing 2.5% and closing out the week at $44.23 a barrel.
The NZDUSD opens at 0.7274 (mid-rate) this morning.
The NZD and AUD were the worst performing of the G10 currencies overnight encountering a myriad of U.S. data releases.
U.S. Private sector employment increased by 158,000 jobs from May to June, a number that economists who released the report said was still strong, but stood well below the robust 230,000 number the report showed in May. The reading also was considerably below the 185,000 gain that economists surveyed by Reuters expected.
In the week ending July 1, the advance figure for U.S. seasonally adjusted initial claims was 248,000, an increase of 4,000 from the previous week's unrevised level of 244,000. The 4-week moving average was 243,000, an increase of 750 from the previous week's unrevised average of 242,250.
U.S. Economic activity in the non-manufacturing sector grew in June for the 90th consecutive month. The Non-Manufacturing Index registered 57.4%, which is half a percentage point higher than the May reading of 56.9%. This represents continued growth in the non-manufacturing sector at a slightly faster rate.
The U.S. Trade deficit narrowed as exports hit a two year high. The goods and services deficit was $46.5 billion in May, down $1.1 billion from $47.6 billion in April, revised. May exports were $192.0 billion, $0.9 billion more than April exports. May imports were $238.5 billion, $0.2 billion less than April imports. The May decrease in the goods and services deficit reflected a decrease in the goods deficit of $0.9 billion to $67.5 billion and an increase in the services surplus of $0.2 billion to $21.0 billion.
Oil prices rallied Thursday night, extending earlier gains after data from the U.S. Energy Information Administration showed that domestic crude supplies dropped by 6.3 million barrels for the week ended June 30. That topped forecasts for a decline of 1.6 million barrels, and also came in above the fall of 5.8 million barrels reported by the American Petroleum Institute late Wednesday when oil fell 4.2%. Supply data were released a day late because of Tuesday's Independence Day holiday.
FOMC Member Powell spoke on â€œThe Case for Housing Finance Reformâ€ at the American Enterprise Institute, Washington, D.C.
G20 meetings begin tonight and continue Saturday.
Global equity markets are a sea of red with only China bucking the trend: Dow -0.61%, S&P 500 -0.77%, FTSE -0.41%, DAX -0.58%, CAC -0.53%, Nikkei -0.44%, Shanghai +0.17%
Gold prices are up $3 or 0.2% to $1,224 an ounce. .WTI Crude Oil prices have rebounded modestly up 0.5% currently trading at $45.35 a barrel.
The NZDUSD opens at 0.7297 (mid-rate) this morning.
The AUD has been the big mover over the past 24hrs, retreating from its recent highs after the RBA kept interest rates at record a record low of 1.5% and voiced their concerns over a lack of wage growth. The NZDAUD cross rate is pushing back up towards 96 cents.
Global equity markets have turned negative as geopolitical tensions increased after North Korea launched its first intercontinental ballistic missile in the direction of Japan. The launch came as the US prepared to mark Independence Day, and triggered a Twitter outburst from President Donald Trump who urged China to act to "end this nonsense once and for all".
At this morning's GDT auction the overall price index decreased for the second consecutive time, edging down by 0.4% following a 0.8% decrease at the previous auction. Although skimmed milk powder fell 4.5%, an increase in whole milk powder prices (+2.6%) as well as an increase in volume sold at this morningâ€™s auction, 28,574 tonnes, up from 21,171 tonnes helped support the NZD.
The UKâ€™s Purchasing Managers' Index for construction fell more than forecast in June decreasing to 54.8 from 56.0 in May. The index had benn forecast to edge down to 55.0.
Global equity markets are broadly lower- Dow Closed, S&P 500 Closed, FTSE -0.27%, DAX -0.31%, CAC -0.40%, Nikkei -0.12%, Shanghai -0.41%
Gold prices have edged higher up 0.2% at $1,223 an ounce. .WTI Crude Oil prices have risen for the ninth consecutive day gaining 0.2% over the past 24hrs to be trading at $47.08 a barrel.
The NZDUSD opens at 0.7321 (mid-rate) this morning.
The NZDUSD continued to rally late on Friday closing out the quarter at 0.7333 its highest level since early February this year. The NZD was helped higher on Friday afternoon by stronger than expected manufacturing PMI out of China, with the index rising from 51.2 to 51.7. Economists had expected the index to edge down to 51.0.
Fridayâ€™s US economic data releases came in ahead of expectations with the Chicago PMI leading the way. With personal income and consumer sentiment printing slightly stronger 0.4 Vs 0.3 and 95.1 Vs 94.5 respectively it was the Chicago PMI that really stood out with the index surging to 65.7 from 59.4 during June. Economists had forecast the index to pull back to 58.1.
The UKâ€™s Q1 GDP was confirmed at 0.2% while consumer confidence in the United Kingdom plummeted to -10 in June after falling to -5 in May. Economists had expected a reading of -7.
On the local front tomorrows business confidence and Wednesday mornings GDT auction are the only economic data releases of note while internationally Thursday morningâ€™s FOMC meeting minutes and the weekends US employment data are likely to take centre stage.
Global equity markets closed out the week mixed - Dow +0.29%, S&P 500 +0.15%, FTSE -0.51%, DAX -0.73%, CAC -0.65%, Nikkei -0.92%, Shanghai +0.14%.
Gold prices fell 2.6% during the month of June closing out the quarter at $1,241 an ounce. .WTI Crude Oil rallied strongly on Friday gaining 2.5% and closing out the quarter just above $46 a barrel
The NZDUSD opens at 0.7297 (mid-rate) this morning.
The NZD has underperformed over the past 24hrs, edging lower against all its major rivals. The AUD has been the strongest performing of the G10 currencies even managing to keep pace with the rising GBP and EUR.
The GBP and the EUR have extended their move higher on expectations of tighter monetary policy, while the AUD is benefiting from rising commodity prices and end of financial year rebalancing flows.
Overnight the BoEâ€™s Chief Economist Haldane, who is part of the BOEâ€™s Monetary Policy Committee fuelled speculation that the BOE are on the verge of tightening when he was quoted during a BBC interview â€œwe need to look seriously at the possibility of raising interest rates to keep the lid on those cost of living increases."
Euro-zone economic confidence increased more than forecast with the economic sentiment index rising to 111.1 in June up from 109.2 in May. The index is now sitting at its highest level since Aug 2007.
There was further good news for the Euro-zone with Germany's consumer price inflation unexpectedly rising to 1.6% in June, up from 1.5% in May and confounding economists who had expected the rate to dip to 1.4%.
The US Commerce Departmentâ€™s better than expected final reading for Q1 GDP had little effect on a softening USD. The report showed gross domestic product increased by 1.4% in Q1 a 0.2% improvement from the previously reported 1.2% increase.
Global equity markets remain mixed - Dow -0.76%, S&P 500 -0.91%, FTSE -0.51%, DAX -1.83%, CAC -1.88%, Nikkei +0.45%, Shanghai +0.47%
Gold prices have edged lower, down 0.3% at $1,245 an ounce. .WTI Crude Oil has pushed up towards $45 a barrel currently sitting at $44.93.
The NZDUSD opens at 0.7309 (mid-rate) this morning.
With Central Bank press releases taking centre stage the GBP has been the strongest performing currency over the past 24hrs, after Bank of England (BOE) Governor Mark Carney suggested interest rates could rise. Mr Carney speaking at the European Central Bank conference in Sintra, Portugal, said â€œsome removal of monetary stimulus is likely to become necessary if the trade-off facing the Monetary Policy Committee (MPC) continues to lessen and the policy decision accordingly becomes more conventional." The GBP spiked higher following the remark. During their last monetary policy meeting on the 15th June the MPC voted 5-3 in favour of keeping interest rates unchanged at record lows. The BOE is the third major Central Bank following the Bank of Canada (BOC) and the European Central Bank (ECB) to hint that monetary policy tightening is not far away.
US overnight economic data releases cancelled each other out, with pending home sales decreasing for the third consecutive month in May. The index declined by 0.8% to 108.5 in May from a downwardly revised 109.4 in April. While during the same period the US trade deficit decreased by $1.2B to 65.9B down from 67.1B in April.
Following three straight months in decline UK house prices increased in June, with the Nationwide Building Society reporting house prices increased by 1.1% m/m in June after edging down 0.2% in May.
Global equity markets remain mixed - Dow +0.69%, S&P 500 +0.84%, FTSE -0.63%, DAX -0.19%, CAC -0.11%, Nikkei -0.47%, Shanghai -0.56%
Gold prices are unchanged trading at $1,249 an ounce. .WTI Crude Oil has continued to push higher, currently up 1.5% at $44.75 a barrel.
The NZDUSD opens at 0.7276 (mid-rate) this morning.
The NZDUSD raced higher during the European trading session peaking at multi-month high 0.7340. The move was quickly reversed as ECB President Mario Draghi hawkish comments led to a sharp recovery in UK, German and US Treasury bond yields at the expense of higher-yielding currencies including the NZD.
Draghi, speaking at the European Central Bank Forum, in Portugal, fuelled market expectations the ECB will reduce stimulus later this year which has seen the EURUSD spike to levels last seen in August 2016. During his speech Draghi stated that â€œwhile there are still factors that are weighing on the path of inflation, at present they are mainly temporary factors that typically the central bank can look through.â€ Draghi went on to say that "any adjustments to our stance have to be made gradually, and only when the improving dynamics that justify them appear sufficiently secure." The EURUSD is currently testing 1.1350 resistance.
This morningâ€™s US consumer confidence data showed an unexpected improvement in June with the index rising to 115.9 from a downwardly revised 117.6 in the previous month. Economists had forecast the index to fall to 116.7 from Mayâ€™s previously reported 117.9 reading.
Global equity markets are mixed - Dow -0.17%, S&P 500 -0.53%, FTSE -0.17%, DAX -0.78%, CAC -0.70%, Nikkei +0.36%, Shanghai +0.18%
Gold prices are up 0.5% trading at $1,249 an ounce. .WTI Crude Oil has continued to push higher, currently up 01.7% at $44.09 a barrel.
The NZDUSD opens at 0.7287 (mid-rate) this morning.
Carrying on from last week a lack of volatility (the VIX sits below 10) has seen currency markets continue to trade tight ranges.
After setting a new record high in May yesterdayâ€™s German business confidence index unexpectedly rose to 115.1 in June. Economists had expected the index to dip from Mayâ€™s 114.6 result to 114.4.
US core durable goods and durable goods orders for the month of May came up shy of economistsâ€™ forecasts with the core orders, which were expected to increase by 0.4% edging up by 0.1%, while durable goods orders which had be expected to decrease by 0.5% decreased by 1.1%. The weaker than anticipated data saw the USD edge lower against all its rivals.
UK mortgage approvals slipped to an eight-month low in May, with the British Bankers' Association (BBA) announcing 40.347 mortgages were approved during the month, the number represents the lowest number of approvals since September 2016.
This morning New Zealandâ€™s trade balance is expected to show a 420M surplus down from 578M last month.
Global equity markets are all positive - Dow +0.17%, S&P 500 +0.12%, FTSE +0.31%, DAX +0.29%, CAC +0.56%, Nikkei +0.10%, Shanghai +0.87%
Gold prices are down 1.0% at $1,243 an ounce. .WTI Crude Oilhave edged higher, currently up 0.8% at $43.35 a barrel.
The NZDUSD opens at 0.7285 (mid-rate) this morning.
The NZDUSD looks set to retest 0.7300 as once again US economic data fell short of economistsâ€™ estimates.
Friday eveningâ€™s US economic data releases disappointed with new home sales, flash manufacturing PMI and flash services PMI all failing to reach economistsâ€™ forecasts. New home sales climbed by 2.9% to an annual rate of 610K well below the expected 5.4% spike while manufacturing PMI and services PMI both slowed in June with the indexâ€™s dipping to 52.1 and 53.0 from 52.7 and 53.6 respectively.
Earlier in the evening Euro-zone private sector growth eased in June after posting a six-year-high in May with a slowdown in services activity leading the way. The pace of growth in Germany's private sector was the weakest since February with the index dipping to 53.7 from 55.4 in May. Economists had expected the index to edge down to 56.2.
There is little in the way of local economic data going into month/quarter end with direction likely to be driven by a string of speeches from several Central Bank Governors and offshore data releases.
Global equity markets closed out the week mixed - Dow -0.01%, S&P 500 +0.15%, FTSE -0.20%, DAX -0.47%, CAC -0.30%, Nikkei +0.11%, Shanghai +0.33%.
Gold prices rallied 0.5% on Friday closing out the week flat at $1,256 an ounce. .WTI Crude Oil prices edged higher on Friday recovering to $43.01 a barrel after setting a new yearly low of $42.05 earlier in the week.
The NZDUSD opens higher at 0.7261 this morning.
The NZD made gains across the board yesterday after the RBNZ gave a relatively upbeat assessment of the NZ economy and outlook at its Official Cash Rate meeting. The OCR remained at 1.75%, as universally expected, the RBNZ said house price inflation had moderated, inflation would get into the middle of its target bank in the medium term, they would prefer a lower NZD, and that rates interest rate would remain unchanged for a â€œconsiderable periodâ€.
The NZDAUD rose to a 5 month high of 0.9635 post the RBNZ OCR decision.
The USD was little changed against most currencies overnight as US jobless claims and home prices releasesâ€™ were in-line with expectations.
Interestingly, longer term US interest rates fell (yield curve flattened) which can be interpreted as the market being sceptical that the current pace of US economic growth justifies further rate increases.
There was little else of note during the overnight session.
Global equity markets were mixed on the day â€“ Dow +0.0%, Nikkei -0.1%, Shanghai -0.3%, FTSE -0.1%.
Gold prices gained 0.4% to USD$1,250.60 an ounce. Oil prices (WTI) rose 0.2% to USD$42.77 per barrel.
The NZDUSD opens at 0.7225 (mid-rate) this morning.
A further fall in oil prices despite a sharp drop in U.S. oil stockpiles has seen the NZD along with other commodity-linked currencies underperform against the majors.
Overnight US crude oil inventories declined by 2.5 million barrels in the week to June 16, the fall in stockpiles was far greater than analystsâ€™ expectations of a 1.2 million barrel decrease. Despite the data crude oil prices are now at a 10 moth low as U.S. oil companies continue adding rigs and Libya boosts output, blunting OPEC-led efforts to re-balance an oversupplied market.
Overnight existing home sales in the US unexpectedly rose during the month of May with the National Association of Realtors report showing existing home sales rose by 1.1% to an annual rate of 5.62M in May after plummeting by 2.5% to a downwardly revised 5.56M in April. Economists had predicted home sales to fall to an annual rate of 5.54M in May from the previously reported 5.57M in April.
The GBP has rallied overnight after Bank of England (BoE) Chief Economist Andrew Haldane was quoted as saying the central bank â€œshould normalize monetary policy well ahead of current market expectationsâ€, and that it â€œwould be prudentâ€ to remove the record-low interest rate in the second-half of 2017. The comments suggest there is a growing rift within the BOE with BOE Gov Mark Carney still in no hurry to move away from the highly accommodative policy stance.
This morning the RBNZ are expected to leave the OCR unchanged at 1.75%, with the tone of the accompanying statement likely to dictate direction for the NZD going forward.
Global equity markets are broadly lower - Dow -0.23%, S&P 500 -0.06%, FTSE -0.33%, DAX -0.32%, CAC -0.37%, Nikkei -0.45%, Shanghai +0.52%
Gold prices have edged higher currently up 0.2% at $1,246 an ounce. .WTI Crude Oil have continued to slide, currently down 0.4% at $42.68 a barrel.
The NZDUSD opens at 0.7228 (mid-rate) this morning.
The Kiwi was the best performing of the G10 currencies in the past 24 hours, particularly against the Great British Pound which continues to struggle.
Prices in the latest Global Dairy Trade (GDT) auction, the 12th sale of calendar 2017, declined 0.8% following a 0.6% gain previously. This was the first decline after six successive gains.Whole Milk Powder prices fell 3.3% following a 2.9% decline previously, although Skim Milk Powder prices rose 1.4% and butter prices have continued to rise. Prices are still fractionally above December 2016 highs in the latest auction which will underpin sentiment. It will, however, be crucial to hold this support area during July and through the New Zealand winter to help sustain confidence in the underlying outlook
In April 2017 the Current Account of the Euro Area recorded a surplus of â‚¬22.2 billion. This reflected surpluses for goods(â‚¬25.1 billion), primary income (â‚¬8.2 billion) and services(â‚¬7.4 billion), which were partly offset by a deficit for secondary income (â‚¬18.5 billion). The 12-month cumulated current account for the period ending in April 2017 recorded a surplus of â‚¬349.9 billion (3.2% of euro area GDP), compared with one of â‚¬358.6 billion (3.4% of euro area GDP) for the 12 months to April 2016. In the financial account, combined direct and portfolio investment recorded net acquisitions of assets of â‚¬71 billion and net incurrences of liabilities of â‚¬1 billion.
In May 2017 the German Producer Prices Index for industrial products rose by 2.8% compared with the corresponding month of the preceding year. Compared with the preceding month April 2017 the overall index fell by 0.2% in May 2017.
The U.S. current account deficit increased to $116.8 billion (preliminary) in the first quarter of 2017 from $114.0 billion (revised) in the fourth quarter of 2016. The deficit increased to 2.5% of gross domestic product (GDP) from 2.4% in the fourth quarter.
The $2.8 billion increase in the current account deficit reflected a $5.3 billion increase in the deficit on goods and a $3.6 billion decrease in the surplus on primary income that were partly offset by a $5.8 billion decrease in the deficit on secondary income and a $0.3 billion increase in the surplus on services.
Global equity markets view Japan as a lone green buoy in a sea of red - Dow -0.16%, S&P 500 -0.44%, FTSE -0.68%, DAX -0.58%, CAC -0.32%, Nikkei +0.81%, Shanghai -0.14%
Gold prices are currently down $2 or 0.2% at $1,243 an ounce. WTI Crude Oil prices have plunged 3.6% at $42.83 a barrel.
The NZDUSD opens at 0.7228 (mid-rate) this morning.
Overnight, hawkish comments from New York Fed President William Dudley has led to USD rally. With very little in the way of economic data releases investors focused on Fed President Dudleyâ€™s address to the North Country Chamber of Commerce, in Plattsburgh, where Dudley reiterated Yellenâ€™s comments from last Thursday. Dudley stated â€œWe are pretty close to full employment. Inflation is a little lower than what we would like, but we think that if the labour market continues to tighten, wages will gradually pick up and with that, inflation will gradually get back to 2 percent." The USD immediately strengthened against all its rivals following Dudleyâ€™s comments. Later this morning Chicago Federal Reserve President Charles Evans is expected to continue talk up the economy when speaking at the New York University Money Marketeers event.
Yesterday U.K. Brexit Secretary David Davis, met with Chief EU negotiator Michael Barnier in Brussels to begin Brexit negotiations. The UK have until 29th March 2019 to negotiate the terms of their departure from the European Union.
This afternoon the release of the RBA monetary policy meeting minutes should dictate direction for the NZDAUD cross rate while overnight tonight, the latest global dairy trade auction will be the main NZD driver ahead of Thursdayâ€™s RBNZ rate statement.
Global equity markets have had a positive start to the week - Dow +0.54%, S&P 500 +0.71%, FTSE +0.81%, DAX +1.07%, CAC +0.90%, Nikkei +0.62%, Shanghai +0.68%
Gold prices have pulled back currently down 0.6% at $1,245 an ounce. .WTI Crude Oil prices have started the week on the back foot, currently down 0.7% at $44.44 a barrel.
The NZDUSD opens at 0.7255 (mid-rate) this morning.
The NZDUSD has bounced back above 0.7250 following further disappointing economic data out of the US.
The US Commerce Department reports on both new residential construction and building permits fell short of economistâ€™s estimates with housing starts falling by 5.5% in May to an annual rate of 1.092 million, while building permits also slumped, down 4.9% to an annual rate of 1.168 million during the same month. The USD fell further sill on the release of the University of Michigan's preliminary consumer sentiment index for the month of June. The index had been expected to edge up from 97.1 to 97.2 however with the index pulling back to 94.5 investors continued to trim their long USD positions.
Earlier in the day the Bank of Japan, as expected kept interest rates unchanged but any investors hoping for a reduction in the BOJâ€s bond purchases were disappointed after Governor Haruhiko Kuroda reiterated that the BOJ has no intention of reducing its bond purchases of 80 trillion yen per year even though recent purchases have slowed significantly.
The highlight for the NZD this week will be Thursdayâ€™s RBNZ rate statement, with the market currently pricing in little chance of an interest rate move or any major changes to its policy statement.
Global equity markets closed out the week broadly higher - Dow +0.11%, S&P 500 +0.03%, FTSE +0.60%, DAX +0.48%, CAC +0.89%, Nikkei +0.56%, Shanghai -0.30%.
Gold prices were little changed on Friday closing out the week at $1,253 an ounce. .WTI Crude Oil prices edged higher on Friday but prices fell 2.4% over the course of the week, closing on Friday at $44.74 a barrel.
The NZDUSD opens at 0.7212 (mid-rate) this morning only 5 points from where we began the week at 0.7207
The Kiwi has traded an 85 point or 1.2% range in the last 24 hours against the USD to finish 0.5% lower.
Australian Labour Force figures for May released yesterday were better than expected. Employment was up 42k, the unemployment rate dropped to 5.5% from 5.7%, and the participation rate was up to 64.9% from 64.8%.
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 negative 0.75% and the target range for the three-month Libor is unchanged at between â€“1.25% and â€“0.25%.
The Euro Area recorded a â‚¬17.9bn surplus in trade in goods with the rest of the world in April 2017, compared with +â‚¬26.6 bn in April 2016.
The Bank of Englandâ€™s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. At its meeting ending on 14 June 2017, the MPC voted by a majority of 5-3 to maintain Bank Rate at 0.25%. The Committee voted unanimously to maintain the stock of corporate bond purchases and the stock of UK government bond purchases at Â£10 billion and Â£435 billion respectively.
UK Retails Sales was estimated to have fallen by 1.2% in May following strong growth in April 2017.
The U.S. job market continues to show signs of strength, as the number of Americans filing for unemployment benefits last week fell to a three-week low. U.S. Initial jobless claims fell by 8k to 237k (forecast was 241k), close to 43-year-low of 227k.
Business activity rebounded strongly in New York State, according to firms responding to the June 2017 Empire State Manufacturing Survey. The headline general business conditions index shot up twenty-one points to 19.8, its highest level in more than two years.
Global equity markets are lower - Dow -0.06%, S&P 500 -0.21%, FTSE -0.74%, DAX -0.89%, CAC -0.50%, Nikkei -0.26%, Shanghai +0.06%.
Gold prices are down $6 or 0.5% at $1,255 an ounce from yesterdayâ€™s open. WTI Crude Oil prices are down 0.8% at $44.39 a barrel.
The Fed hiked Interest Rates 0.25% this morning at 6am NZT. The pertinent points of the FOMC statement at 6:30am NZT were:
The NZ Current account deficit seasonally adjusted was $2.8 billion during the quarter was up $1.1 billion from December last year. â€œIt was the biggest quarterly deficit since the global financial crisis hit world markets in 2008,â€ Stats NZ said
The Kiwi is up against all of its trading partners except the AUD. The Kiwi briefly tested over 0.7300 this morning and has traded a 120 point range in the last 24 hours.
The NZDUSD opens at 0.7247 (mid-rate) this morning.
U.S. Fed have hiked interest rates 0.25% to 1.25% (RBNZ is at 1.75% and RBA is at 1.5%)
Rate hike reflects Economic progress
Fed Fund rate remains somewhat below neutral level
Economy should continue to warrant hikes, and appears to have rebounded
The Fed expects inflation to move up to 2%
Signs of an improving Labor market
Job market should strengthen somewhat further
Apparent one off events weigh on inflation
Policy is not on a pre-set course
Balance sheet not intended to be active policy tool
Trimming of balance sheet should begin this year by USD 50bn per month
Balance sheet trim will take â€œa few yearsâ€
Expect moderate growth in the next few years
Yellen: â€œI intend to serve out term as Fed chairâ€ â€“ no conversations with Trump about Future
Yellen declines comment on future role as Fed Chair, but â€œintends to find appropriate nomineesâ€
Conditions in place for inflation to rise
The U.S. Consumer Price Index for All Urban Consumers (CPI-U) decreased 0.1% in May on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported overnight. Over the last 12 months, the all items index rose 1.9%. A decrease in the energy index was the main contributor to the monthly decrease in the all items index.
U.S. retail sales recorded their biggest drop in more than a year in May amid declining purchases of motor vehicles and discretionary spending, which could temper expectations for a sharp acceleration in economic growth in the second quarter. The Commerce Department said overnight retail sales fell 0.3% last month after an unrevised 0.4% increase in April. May's decline was the largest since January 2016 and confounded economists' expectation for a 0.1% gain.
The number of persons employed increased by 0.4% seasonally adjusted in both the Euro Area (EA19) and in the EU28 in the first quarter of 2017 compared with the previous quarter. In the fourth quarter of 2016, employment increased also by 0.4% in both areas. Compared with the same quarter of the previous year, employment increased by 1.5% in the euro area and by 1.4% in the EU28 in the first quarter of 2017.
The UK unemployment rate was 4.6%, down from 5.0% a year earlier and the joint lowest since 1975. The UK employment rate (the proportion of people aged from 16 to 64 who were in work) was 74.8%, the joint highest since comparable records began in 1971.
Today we have NZD GDP at 10:45am, AUD Inflation Expectations at 1pm, and AUD Employment change, AUD Unemployment Rate and RBA bulletin at 1:30pm
Global equity markets are mainly lower - Dow +0.07%, S&P 500 -0.13%, FTSE -0.35%, DAX +0.32%, CAC -0.35%, Nikkei -0.08%, Shanghai -0.73%.
Gold prices were up $5 or 0.4% at $1,271 an ounce before the FOMC but are now down $5 or 0.4% from yesterdayâ€™s open to $1261. WTI Crude Oil prices have plunged 3.6% lower at $44.75 a barrel.
The NZDUSD opens at 0.7224 (mid-rate) this morning.
The Kiwi is up against most of its trading partners, but continues to be weak against the CAD and GBP. All eyes are now focused on the Fed Rate announcement tomorrow morning at 6am NZT, and the FOMC statement at 6:30am NZT
The UK had a myriad of news on the wires overnight. The UK Consumer Prices Index (CPI) including owner occupiersâ€™ housing costs 12-month inflation rate was 2.7% in May 2017, up from 2.6% in April. The rate has been steadily increasing following a period of relatively low inflation in 2015 and is at its highest since April 2012.
U.K. inflation resumed its upward march last month, accelerating more than forecast to the fastest pace in four years. An increase in prices for computer games, laptops and package holidays -- partly reflecting the impact of the weaker pound -- lifted the inflation rate to 2.9%, the highest since June 2013. Economists had forecast that it would remain at 2.7%.
U.K. Core inflation, which excludes food and energy, also unexpectedly increased in May, according to the Office for National Statistics. It reached 2.6%, the highest since November 2012.
The annual rate of U.K. Producer Price Inflation remained at 3.6% for the third consecutive month and slowed on the month to 0.1%, from 0.4% in March and April. The annual rate of inflation for materials and fuels (input prices) fell back to 11.6% in May, continuing its decline from 19.9% in January 2017 following the recent strength of sterling. The rate of increase in factory gate prices appears to be stabilising now that manufacturing input costs have largely fallen month-on-month since January.
The ZEW Indicator of Economic Sentiment for Germany dropped by 2.0 points in June 2017 and now stands at 18.6 points. The indicator thus still remains below the long-term average of 23.9 points. By contrast, the assessment of the current economic situation in Germany improved once again in June. The indicator climbed by 4.1 points to 88.0 points. This is the highest level since July 2011. Despite a slight drop in expectations, the prospects for the economic growth in Germany in the coming six months remain positive.
The U.S. Producer Price Index for final demand was unchanged in May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.5% in April and edged down 0.1% in March.
For the first time in 3 years, U.S. Core Producer Prices have risen at a faster pace than The Fed's mandated 2% target. May PPI (ex food and energy) rose 2.1% year-over-year, the highest since May 2014, as goods prices tumbled (gasoline, motor vehicles, fresh fruit) while services costs (retailer and wholesaler prices, and residential lending) jumped.
Global equity markets are mixed - Dow +0.38%, S&P 500 +0.38%, FTSE -0.15%, DAX +0.59%, CAC +0.40%, Nikkei -0.05%, Shanghai +0.44%.
Gold prices are unchanged at $1,266 an ounce. WTI Crude Oilprices have pushed higher again, currently up another 0.7% at $46.43 a barrel.
The NZDUSD opens at 0.7206 (mid-rate) this morning.
In the absence of any notable economic data releases currency markets have traded in an orderly fashion with the GBP falling further after Moody's warned that U.K. election outcome would "complicate and probably delay" Brexit negotiations. Ahead of the shock election result British Prime Minister Theresa May had planned to start the negotiation with the European Union next Monday.
The CAD has been the best performing of the G10 currencies after Senior Deputy Governor of the bank of Canada, Carolyn Wilkins commented that the Central Bank â€œwill assess if all the stimulus in place is still needed as economy growth continues and, ideally, broadens furtherâ€. The market has viewed this comment as a hint that a rate hike from the BOC this year, is a possibility.
Global equity markets have turned negative - Dow -0.29%, S&P 500 -0.36%, FTSE -0.21%, DAX -0.18%, CAC -0.47%, Nikkei -0.45%, Shanghai -0.59%.
Gold prices are little changed at $1,266 an ounce. .WTI Crude Oil prices have pushed higher, currently up 0.7% at $46.13 a barrel.
The NZDUSD opens at 0.7207 (mid-rate) this morning.
On Friday markets were dominated by the UK election results with the early exit polls followed by the final count resulting in a hung parliament. Prime Minister Theresa May has resisted pressure to resign and is seeking support from Northern Ireland's Democratic Unionist Party in an effort to keep the Conservatives in power. As you would expect the GBP plunged, initially losing 2% in response to the exit polls, but has since stabilised.
The week ahead will be dominated by Thursdayâ€™s economic data releases with the US retail sales and CPI data releases printing ahead of the FOMC monetary policy statement and New Zealandâ€™s Q1 GDP result. As of this morning the market has all but priced in a hike from the Federal Reserve, while economists are forecasting our Q1 GDP to increase by 0.7%.
Global equity markets closed out the week mixed - Dow +0.42%, S&P 500 -0.08%, FTSE +1.04%, DAX +0.80%, CAC +0.67%, Nikkei +0.52%, Shanghai +0.26%.
Gold prices fell 1% on Friday to close out the week at $1,265 an ounce. .WTI Crude Oil prices edged higher on Friday to closing out the week at $55.83 a barrel for a weekly loss of 4%.
The NZDUSD opens slightly higher this morning at 0.7214 (mid-rate).
The UK General Election results are currently unfolding with polls closing at 9am NZT. Polls are predicting Theresa May and the Conservativeâ€™s to increase their majority in the House of Commons. The first exit polls will start hitting the wires between 10am and 11am NZT. The GBP is currently stronger verses the USD and EURO but losing ground against the resurgent Kiwi dollar. Expect more volatility during the day.
The EURO headed lower overnight after the European Central Bank lowered its inflation projections. It also held interest rates steady at 0.0% while at the same time, signalling that it would be unlikely to cut rates further. ECB President Draghi stated that they expected interest rates to â€œremain at present levels for an extended period of timeâ€. In a further dovish statement, they stated that â€œIf the outlook becomes less favourable or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the Governing Council stands ready to increase the programme in terms of size and/or duration."
There was no new dramatic headlines coming from former FBI Director Comeyâ€™s much anticipated congressional hearing overnight. While there was no new evidence of collusion between Trumpâ€™s campaign team and Russian hackers looking to sway the US election, Trumpâ€™s lawyer has hit back claiming Comey has admitted being a leaker of classified information.
Oil prices continue to fall. Still reeling from the unexpected US inventories surge and more crude supply coming through from Nigeria, the WTI Crude price is down to 45.72 this morning.
The NZDUSD opens at 0.7191 (mid-rate) this morning.
The NZD has had mixed fortunes over the past 24hrs with the AUD the standout performer on the back of a better-than-expected Q1 GDP report, and the CAD the worst performing of the G10 currencies weakening on the back of plummeting oil prices.
A lack of US economic data releases has seen markets tread water overnight, with investors looking to tonightâ€™s trifecta of events for direction. Former FBI Director James Comey has released a prepared testimony confirming Donald Trump pressured him to drop investigations related to an ongoing probe into Russia's meddling in the 2016 election. Comey is due to testify to congress tonight.
The European Central Bank (ECB) are expected to keep interest rates unchanged at tonightâ€™s monetary policy meeting, while a lack of inflation is likely to see the ECB resist calls for them to start tapering QE.
UK voters head to the polls tonight with the latest election polls showing the Conservatives with a seven point lead the first exit polls are expected to be released at 11:00am tomorrow morning.
Crude oil futures fell sharply after US inventories increased by 3.3 million barrels in the week ended June 2. The result came as a complete surprise with analysts expecting a decrease of 3 million barrels.
Global equity markets are mixed Dow +0.21%, S&P 500 +0.11%, FTSE -0.62%, DAX -0.14%, CAC -0.07%, Nikkei +0.02% Shanghai +1.23%.
Gold prices are trading slightly lower, down 0.5% at $1,285 an ounce .WTI Crude Oil prices have plummeted, currently down 4.4% at $45.96 a barrel.
The NZDUSD opens at 0.7186 (mid-rate) this morning.
The JPY has been the best performing currency over the past 24hrs as investors offload risk in favour of safe havens. The shift to safe havens started yesterday afternoon on the announcement that a number of Middle Eastern countries had severed ties with Qatar amid accusations it is supporting terrorism. Risk is likely to dominate markets over the next 48hrs with investors weary of Thursdayâ€™s European Central Bank meeting, along with the UK election and former FBI Director James Comey's congressional testimony.
Overnight European data releases came in mixed with retail sales printing just below the expected 0.2% result with a 0.1% gain, while investor confidence spiking to a near 10 year high in June. The index now sits at 28.4 up from 27.4 in May and ahead of the forecast 27.6 result.
The latest GDT auction produced another rise in prices with the index rising 0.6%, with skim milk powder prices spiking 7.9% offsetting a 2.9% fall in the price of whole milk powder which fell to an average of $3,143 a tonne.
This morningâ€™s manufacturing data is likely to have little effect on the NZD while the NZDAUD cross rate direction will be dictated by the release of Australiaâ€™s Q1 GDP report due out at 13:30 this afternoon.
Global equity markets have edged lower Dow -0.05%, S&P 500 -0.05%, FTSE -0.01%, DAX -1.04%, CAC -0.73%, Nikkei -0.95% Shanghai +0.34%.
Gold prices have gained 1% overnight currently, trading at $1,291 an ounce .WTI Crude Oil prices have b
The NZDUSD opens at 0.7141 (mid-rate) this morning.
Fridayâ€™s disappointing US jobs report has seen broad-based USD weakness with the NZD consolidating close to 0.7150.
The US nonfarm payroll report for the month of May came in well below the marketâ€™s expectations pushing the US dollar index (DXY) down towards 6month lows. The report showed a sharp deceleration from an average of 181k jobs over the past 12 months with an increase of only 138k for May following on from a 174k in April.
Overnight US economic data releases were roughly in line with expectations with the ISM non-manufacturing index edging down to 56.9 in May from 57.5 in April (economists had forecast the index to dip to 57.0). As expected US factory orders nudged down by 0.2% in April after jumping by an upwardly revised 1.0 % in March.
The UK services PMI slowed more than expected in May with the business activity index falling to 53.8 after rising to 55.8 in April. Economists had expected the index to dip to 55.1.
The key domestic driver for the NZD this week is likely to be tonightâ€™s GDT auction while this afternoons RBA rate statement should dictate direction for the NZDAUD cross rate.
Global equity markets are lower Dow -0.04%, S&P 500 -0.07%, FTSE -0.29%, DAX Closed, CAC -0.66%, Nikkei -0.03% Shanghai -0.45%.
Gold prices have edged higher, trading at $1,279 an ounce .WTI Crude Oil prices continue to fall currently trading at $47.24 a barrel.
The NZDUSD opens a little lower at 0.7062 this morning.
With no domestic data releases yesterday, it was up to offshore statistics to impact the level of the NZD.
Australian retail sales figures were surprisingly strong. This caused nothing more than a brief dip in the NZDAUD upward trend.
Of greater impact was the private survey of Chinaâ€™s manufacturing activity which contracted for the first time in almost 12 months. It caused the AUD to fall sharply dragging the NZD along for the ride to a lesser degree â€“ nudging the NZDAUD even loftier levels.
The USD strengthened overnight after the US ADP jobs report exceeded forecasts. This release helped to push expectations to 87% that the US Fed will raise interest rates at its June 14-15 (NZ time) meeting.The more comprehensive US non-farm payrolls employment hits the tapes tonight.
Global equity markets were generally higher on the day â€“ Dow 0.7%, Nikkei +0.4%, Shanghai -0.5%, FTSE +0.4%.
Gold prices fell by 0.5% to USD$1,268 an ounce. Oil prices (WTI) fell 0.5% to USD$48.10 per barrel.
The NZDUSD opens at 0.7097 (mid-rate) this morning.
The NZDUSD is attempting to push back above 0.7100 as I type, after stretching to a high of 0.7117 following yesterdayâ€˜s business confidence data release.
The EUR has been the best performing of the G10 currencies over the past 24hrs with investors seemingly ignoring disappointing Euro-zone inflation data and buying EURâ€˜s on the back of better than expected employment data. Headline inflation fell to 1.4% from 1.9% in April, with core inflation, which excludes energy, food, alcohol & tobacco, falling to 0.9% from 1.2%. Economists had forecast 1.5% for the headline and 1% for the core inflation. Euro-zone unemployment unexpectedly fell to 9.3% in April down from 9.4% in March, and now sits at its lowest level since March 2009 when the rate was 7.8%.
US data releases overnight once again sent mixed signals to investors with another fall in pending home sales for the month of April offsetting a stronger than forecast Chicago PMI data release.
Crude oil prices are falling as increased output from Libya and Nigeria is seen to be offsetting the supply limit deal between Saudi Arabia and Russia. US crude oil inventories data is due to be releases overnight, tonight.
This morningâ€˜s overseas trade index data release should have little effect on the currency while this afternoon the Australian retail sales and Capex data releases will dictate direction for the NZDAUD cross rate.
Global equity markets have edged lower - Dow -0.16%, S&P 500 -0.23%, FTSE -0.09%, DAX -0.11%, CAC -0.92%, Nikkei -0.14% Shanghai +0.23%.
Gold prices have edged higher, up 0.2% trading at $1,269 an ounce .WTI Crude Oil prices are down 2.8% trading at $48.36 a barrel.
The NZDUSD opens at 0.7095 (mid-rate) this morning.
Ahead of this morningâ€˜s RBNZ financial stability report the NZD has managed to extend its gains against all its rivals.
Overnight Germanyâ€˜s economic data releases disappointed with both their monthly import prices and preliminary CPI for the month of April falling short of economistâ€˜s estimates. Germanyâ€˜s import prices which had been expected to rise by 0.2% fell by 0.1%, while German inflation slowed by more than expected with the monthly consumer price index falling by 0.2% m/m. Economists had expected the index to edge down by 0.1%.
The USD came under pressure after their consumer confidence unexpectedly fell for a second consecutive month in May, with the index slipping to 117.9 down from 119.4 in April, the index had been expected to nudge back above 120. Other US data releases printed in line with expectations with both personal income and spending increasing by 0.4% in the month of April.
Global equity markets are broadly lower - Dow -0.24%, S&P 500 -0.09%, FTSE -0.28%, DAX -0.24%, CAC -0.50%, Nikkei -0.02% Shanghai Closed.
Gold prices are down 0.3% trading at $1,262 an ounce .WTI Crude Oil prices have edged back below $50 down 0.5% to be trading at $49.73 a barrel.
The NZDUSD opens at 0.7060 (mid-rate) this morning.
The Kiwi opens higher against all its major competitors in what was a relatively quiet night in the markets with Bank Holidays in the U.S., China and the U.K
European Central Bank President Mario Draghi spoke overnight. â€œEuro zone growth may be improving but inflation remains subdued and still requires substantial stimulusâ€ hence tempering expectations for the bank's June 8 policy meeting.
With euro zone growth on its best run since the bloc's crisis a decade ago, pressure from more conservative countries has been mounting on Draghi to start planning an exit from its policy of aggressive bond purchases and sub-zero rates, setting up June as a potentially key meeting.
Still, with wage growth remaining subdued and underlying inflation weak, Draghi argued that the extraordinary monetary policy support was still needed to raise inflation back to the bank's 2 percent target.
Monetary developments in the Euro area were released overnight for April 2017. The annual growth rate of the broad monetary aggregate M3 decreased to 4.9% in April 2017, from 5.3% in March, averaging 5.0% in the three months up to April.
The annual growth rate of the narrower aggregate M1, which includes currency in circulation and overnight deposits, stood at 9.2% in April, compared with 9.1% in March.
The annual growth rate of Private Loans (adjusted loans to households) stood at 2.4% in April, unchanged from the previous month. The annual growth rate of adjusted loans to non-financial corporations stood at 2.4% in April, compared with 2.3% in March.
Global equity markets are closed in the US, UK, Germany, France, Hong Kong, China, - last readings Dow -0.01 S&P 500 +0.03%, FTSE +0.40%, DAX +0.21%, CAC -0.08%, Nikkei -0.02% Shanghai +0.07%.
Gold prices are up $2 or 0.2% trading at $1,266 an ounce .WTI Crude Oil prices are up 0.4% to be trading at $50.00 a barrel.
The NZDUSD opens at 0.7041 (mid-rate) this morning.
The Kiwi opens higher against all its major competitors except the Japanese Yen, and above key psychological level of 0.7000 versus the U.S. dollar
The U.S. Census Bureau announced the April advance report on manufacturersâ€˜ shipments, inventories and orders on Friday night. New Orders for manufactured durable goods in April decreased $1.6 billion or 0.7% to $231.2 billion. This decrease down, following four consecutive monthly increases, followed a 2.3% March increase.
May 26 U.S. economic growth slowed less sharply in the first quarter than initially thought, but the weakness was likely an aberration amid a strong labor market that is near full employment. Gross domestic product increased at a 1.2% annual rate instead of the 0.7% pace reported last month, the Commerce Department said in its second estimate on Friday. That was the weakest performance in a year (since Q1 2016) and followed a 2.1% rate of expansion in the fourth quarter. The government revised up its initial estimate of consumer spending growth, but said inventory investment was far smaller than previously.
The first-quarter weakness is a blow to President Donald Trump's ambitious goal to sharply boost economic growth.During the 2016 presidential campaign Trump had vowed to lift annual GDP growth to 4 percent, though administration officials now see 3 percent as more realistic.
U.S. Consumers were less optimistic than expected during the month of May, new figures showed on Friday. The University of Michigan's Consumer Sentiment Index hit 97.1 for its final reading in May. Economists expected the index to reach 97.5, according to a Thomson Reuters consensus estimate, down from a preliminary reading of 97.7
Bank Holidays today in the U.S., China and the U.K
Global equity markets are broadly higher - Dow +0.01%, S&P 500 +0.03%, FTSE +0.40%, DAX -0.15%, CAC -0.01%, Nikkei -0.64% Shanghai +0.07%.
Gold prices are up $9 or 0.7% trading at $1,264 an ounce .WTI Crude Oil prices have plummeted 2.2% to be trading at $49.80 a barrel.
The NZDUSD opens at 0.7024 (mid-rate) this morning.
The Kiwi opens modestly lower against most currencies but is up against the AUD and CAD. For the week the Kiwi is up 1.3% against the USD and EUR, up 1.5% versus the AUD, up 1.8% versus the JPY, and is up 2.0% against the Pound.
OPEC and non-members led by Russia decided overnight to extend cuts in oil output by nine months to March 2018 as they battle a global glut of crude after seeing prices halve and revenues drop sharply in the past three years.
Oil prices dropped more than 5% as the market had been hoping oil producers could reach a last-minute deal to deepen the cuts or extend them further, until mid-2018.
OPEC's cuts have helped to push oil back above $50 a barrel this year, giving a fiscal boost to producers, many of which rely heavily on energy revenues and have had to burn through foreign-currency reserves to plug holes in their budgets
UK gross domestic product (GDP) in volume terms was estimated to have increased by 0.2% between Quarter 4 2016 and Quarter 1 2017.
U.S. jobless-benefit claims inched up last week, while still hovering near levels that reflect a strong labor market. U.S. Initial benefit filings increased by 1k to 234k, forecast was 238k
The U.S international trade deficit was $67.6 billion in April, up $2.5 billion from $65.1 billion in March.
Global equity markets are mainly higher - Dow +0.37%, S&P 500 +0.53%, FTSE +0.04%, DAX -0.17%, CAC -0.08%, Nikkei +036% Shanghai +1.43%.
Gold prices are up $1 trading at $1,255 an ounce .WTI Crude Oilprices have plummeted 5.1% to be trading at $48.71 a barrel.
The NZDUSD opens at 0.7048 (mid-rate) this morning.
Markets traded tight ranges ahead of this morning's FOMC minutes with the Dollar Index (DXY) edging higher.
Overall the latest FOMC minutes contained few surprises. The market is now pricing in an 83% chance that the Fed will announce a modest hike in interest rates at their next meeting on the 14th June. Although FOMC voters added the caveat that â€œit would be prudentâ€ to wait for evidence that a recent slowdown in economic activity had been transitory. â€œMost participants judged that if economic information came in about in line with their expectations it would soon be appropriate for the committee to take another step in removing some policy accommodation.â€ Policy makers also backed a plan that would gradually shrink their $4.5 trillion balance sheet.
Overnight the National Association of Realtors reported US existing home sales fell by 2.3% to an annual rate of 5.57 million in April after spiking by 4.2% to a ten-year high of 5.70 million in March. Economists had forecast sales to fall to a rate of 5.65 million.
ECB President Mario Draghi acknowledged the euro zone's best economic growth run in a decade â€œand this will of course be fully reflected in our future decisions,â€ while at the same time he urged caution, arguing â€œthat economic output will not reach the currency bloc's potential before the end of next year and that wage growth is not reassuring.â€ Draghi went on to state that â€œinflation remains weak so there is no need to deviate from the policy path already laid out.â€ The ECB's next policy meeting is on the 8th June.
The highlight for the NZD today will be our annual budget due to be released at 2:00pm.
Global equity markets have turned positive - Dow +0.31%, S&P 500 +0.08%, FTSE +0.40%, DAX +0.19%, CAC +0.32%, Nikkei +0.72% Shanghai +0.07%.
Gold prices are unchanged trading at $1,254 an ounce .WTI Crude Oil prices have edged down 0.3% to be trading at $51.33 a barrel.
The NZDUSD opens at 0.7005 (mid-rate) this morning.
The NZD continues to outperform, extending yesterday's gains against all its main rivals, with the NZDUSD rate trading to a high of 0.7041. Investors remain in a cautious mood and will look to tomorrow's Fed minutes for further hints about a US rate hike in June before adding to their positions.
The JPY has weakened after an IHS Markit report showed Japan's manufacturing activity expanded at the weakest pace in 6mths. The Flash Manufacturing Purchasing Managers' Index (PMI) fell to 52.0 in May following a 52.7 reading in April. The index had been forecast to rise to 52.9.
The GBP slid lower yesterday following the terror attack in Manchester, England, where 22 people were killed and 59 injured by a suspected suicide bomber at the end of an Ariana Grande concert.
German Ifo Business Sentiment is at record highs with the index rising to 114.6in May up from an upwardly revised 113.0 in April. The index had been expected to edge up to 113.1.
New home sales in the US for the month of April fell by 11.4% to an annual rate of 569k from an upwardly revised 642k in March. The result comes up well short of the expected 602k of new home sales. The sharpest drop came in the West where sales plummeted by 26.3%.
This morning's Trade Balance is expected to show a surplus of 268m down from 332m in April.
The NZDUSD opens at 0.6991 (mid-rate) this morning.
The NZD has started the week as the strongest of the G10 currencies having outperformed all of its rivals. Late yesterday the NZD broke up through its 0.6950 resistant level against the USD and has since raced higher. Fundamentally there has been no new economic data driving this move although technicals would suggest the move higher was overdue.
Overnight comments made by German Chancellor Angela Merkel about the EUR has seen the EUR add to its recent gains against the USD. Merkel was quoted as saying the single market currency is â€œtoo weakâ€ and blamed the European Central bank (ECB) for the record German trade surplus. The comments will add to the pressure already on ECB President Mario Draghi to tighten monetary policy.
Once again there is very little in the way of economic data releases during our trading day and investors will monitor speeches from two of the FOMC voting members, Lael Brainard and Charles Evans who are both expected to continue to back future rate hikes in line with Janet Yellen's forecast of four hikes in 2017.
Global equity markets are mixed - Dow +0.46%, S&P 500 +0.46%, FTSE +0.34%, DAX -0.15%, CAC -0.03%, Nikkei +0.46% Shanghai -0.48%.
Gold prices continue to edge higher currently up 0.5% trading at $1,261 an ounce .WTI Crude Oil prices are still moving upward, extending their recent gains by 0.7% to be currently trading at $50.70 a barrel.
The NZDUSD opens at 0.6931 (mid-rate) this morning.
In the absence of any notable US economic data releases currency markets traded in an orderly fashion on Friday with the USD remaining under pressure due to political uncertainty surrounding the Trump administration.
Friday's Euro-zone data releases printed ahead of expectations with consumer confidence strengthening for the third consecutive month in May, while Germany's producer prices increased by 3.4% y/y in April after recording . 3.1% rise in March. This represents the largest increase since December 2011.
Global equity markets continued to recover from their mid-week sell off with all the major averages closing out the week in positive territory, but still down on a weekly basis.
There is very little in the way of domestic economic data releases ahead of Thursday's annual budget release, while internationally Thursday morning's FOMC meeting minutes will be scrutinised by investors for clues on the timing of the next rate move. Currently the market is pricing in a 76% chance of a hike in June.
Global equity markets had a positive close to the week - Dow +0.69%, S&P 500 +0.67%, FTSE +0.46%, DAX +0.39%, CAC +0.66%, Nikkei +0.19%, Shanghai +0.02%.
Gold prices edged higher on Friday closing out the week at $1,255 an ounce for a weekly gain of 2.1% .WTI Crude Oil prices spiked 5% over the course of the week, and closed on Friday back above $50, at $50.33 barrel.
The NZDUSD opens at 0.6940 (mid-rate) this morning.
Global equity markets and the US dollar are sharply lower on the back of ongoing political turmoil surrounding the Trump administration. The latest accusations are that Donald Trump interfered with the FBI's investigation into his former National Security Advisor Michael Flynn. Trump is accused of asking former FBI director James Comey to end the federal investigation into his former national security adviser, Michael Flynn. The news comes hot on the heels that Trump shared highly classified information with Russian officials.
The political uncertainty has seen investors flock to safe-havens with the JPY and gold benefitting the most.
Overnight Euro-zone inflation for the month of April printed in line with economist's estimates, increasing to 1.9% following on from March's 1.5% result.
UK unemployment edged lower in Q1 with the Office for National Statistics report showing the unemployment rate now sits at 4.6%, down from 4.7% in Q4 2016. Economists had expected the unemployment rate to remain at 4.7%
NZ has no scheduled economic data releases due out today although the NZDAUD cross rate will be dictated by the monthly Australian employment report due to be released at 13:30.
Global equity markets are a sea of red - Dow -1.53%, S&P 500 -1.47%, FTSE -0.26%, DAX -1.35%, CAC -1.63%, Nikkei -0.53% Shanghai -0.27%.
Gold prices continue to rise currently up 01.6% trading at $1,258 an ounce .WTI Crude Oil has rallied 1% currently trading at $49.18 a barrel.
The NZDUSD opens at 0.6883 (mid-rate) this morning.
This morning's Global Dairy Trade auction has had little effect on the NZD, with the EUR and JPY outperforming all other G10 currencies.
Prices at this morning's Global Dairy Trade auction have increased for a fifth consecutive time. The index increased by 3.2% from the previous auction a fortnight ago. Whole milk powder and skim milk powder edged up 1.3% and 15 respectively while the big mover was butter which increased by 11.2%. A total volume of 21,236 metric tonnes of product sold at this morning's auction, slightly less than the 22,633 metric tonnes of product sold at the previous auction.
The EUR has been the best performing G10 currency over the past 24hrs spiking after the Euro-zone Flash GDP rose 0.5%, in line with expectations and although
German ZEW Economic Sentiment came up short of its forecast result (20.6 Vs 22.3) the Euro-zone ZEW Economic Sentiment surged to 35.1 well ahead of its estimated 29.1 reading.
US economic data releases were once again mixed with disappointing building permits and housing starts data releases being offset by better than expected industrial production.
Inflation in the UK rose more-than-expected with the Office for National Statistics report showing CPI spiked to 2.7% in April ahead of the forecast 2.4% increase. CPI is now at its highest level since September 2013.
The highlight for the NZD today will be this morning's Producer Price Index (PPI) data release, currently forecast to increase by 0.7%.
Global equity markets are mixed - Dow -0.04%, S&P 500 -0.13%, FTSE +0.91%, DAX -0.02%, CAC -0.21%, Nikkei +0.25% Shanghai +0.74%.
Gold prices continue to push higher currently up 0.7% trading at $1,238 an ounce .WTI Crude Oil is little changed currently trading at $48.70 a barrel.
The NZDUSD opens at 0.6877 (mid-rate) this morning.
The NZD is trading a little higher against the majority of its rivals,benefiting from yesterday's better-than-expected retail sales data. The report showed Q1 retail sales spiked a seasonally adjusted 1.5% (exp 1.1%) while core retail sales (excludes autos and gas stations) were up 1.2% (exp 0.9%).
Overnight US data releases were once again mixed with the New York manufacturing sector reporting a slight contraction for the month of May. The index dipped by 1.0 in May following a 5.2 gain in April. Economists had forecast the index to rise to 7.0. The better news came from the latest homebuilder confidence report with the Housing Market Index unexpectedly rising to 70 in May after declining to 68 in April. Economists had forecast an unchanged result.
The only data release of note during our trading day is the release of the RBA monetary policy meeting minutes due to hit the tapes at 13:30, while overnight tonight the NZD direction will be dictated by the latest GDT auction. The futures prices for WMP are currently down 2% ahead of tonights auction.
Global equity markets are broadly higher - Dow +0.37%, S&P 500 +0.42%, FTSE +0.26%, DAX +0.29%, CAC +0.22%, Nikkei -0.07% Shanghai +0.22%.
Gold prices have edged higher currently trading at $1,227 an ounce .WTI Crude Oil are up for the fourth consecutive trading session currently trading at $48.87 a barrel a gain of 2.2%.
The NZDUSD opens at 0.6855 (mid-rate) this morning.
Markets traded sideways during our trading day on Friday as investors took a breather ahead of Friday night's US economic data releases.
The USD came under pressure as both retail sales and inflation data fell short of economist's estimates. The Commerce Department retail sales report showed retail sales climbed by 0.4% in April, economists had expected a 0.6% increase, while the price index rose by 0.2% in April after falling 0.3% in March. Economists had forecast a 0.3% increase in the index. The news was not all bad for the dollar with consumer sentiment in the U.S showing a modest improvement in May. The University of Michigan report said the preliminary reading on the consumer sentiment index for May increased to 97.7, after April's final reading of 97.0. The index had been expected to inch up to 97.3.
Key domestic data releases for the NZD this week will be this morning's quarterly retail sales report which is expected to show an increase of 1.1% during Q1 after reporting a 0.8% gain in Q4, while on Wednesday morning the latest GDT auction followed by our quarterly PPI data release should dictate direction for the NZD.
Global equity markets closed out the week mixed- Dow -0.11%, S&P 500 -0.14%, FTSE +0.66%, DAX +0.47%, CAC +0.41%, Nikkei -0.39%, Shanghai +0.72%.
Gold prices edged higher on Friday closing out the week at $1,228 an ounce .WTI Crude Oil prices traded sideways on Friday closing out the week with a modest 3.5% gain at $47.84 a barrel.
The NZDUSD opens at 0.6852 (mid-rate) this morning.
The Kiwi was the worst performing currency of the majors in the last 24 hours.
The Kiwi fell 100 points after the RBNZ rate announcement yesterday at 9am. The RBNZ left rates at 1.75% as expected but the key point was monetary policy will remain accommodative for considerable period.
In the week ending May 6, the advance figure for seasonally adjusted U.S. initial claims was 236,000, a decrease of 2,000 from the previous week's unrevised level of 238,000.
The bigger-than-forecast rebound in April wholesale prices indicates inflation pressures continue to build in the U.S. economy and that March's decline was short-lived, Labour Department data showed overnight. U.S. Producer-price index increased 0.5%, forecast was 0.2% rise, following a 0.1% decline the prior month.
The U.K. Index of Production for Q1 2017 was estimated to have increased by 0.1%. Increases of 0.3% in manufacturing and 1.8% in mining and quarrying were offset by a fall of 4.3% in energy supply. In March 2017, total production decreased by 0.5% compared with February 2017.
Between Q4 2016 and Q1 2017, the total trade deficit for the UK (goods and services) widened by Â£5.7 billion to Â£10.5 billion; this followed a sharp narrowing in Q4 2016. The UK's total trade deficit (goods and services) widened by Â£2.3 billion between February and March 2017 to Â£4.9 billion, contributing nearly half of the quarterly deficit.
The Bank of England's Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. At its meeting ending on 10 May 2017, the Committee voted by a majority of 7-1 to maintain Bank Rate at 0.25%. The Committee voted unanimously to maintain the stock of sterling non-financial investment-grade corporate bond purchases, at Â£10 billion, and the UK government bond purchases at Â£435 billion.
The Bank of England said it may need to raise interest rates faster than the market suggests, assuming that Brexit goes well.
Global equity markets are mixed - Dow -0.17%, S&P 500 -0.28%, FTSE +0.02%, DAX -0.36%, CAC -0.32%, Nikkei +0.31%, Shanghai +0.29%.
Gold prices are up $7 or 0.6% trading at $1,225 an ounce .WTI Crude Oil is up 1.2% currently trading at $47.81 a barrel.
The NZDUSD opens at 0.6888 (mid-rate) this morning.
The NZD starts the day back under 0.6900 after setting a 0.6927 high in the last 24 hours.
The Australian budget was released overnight and was close to market expectations. The main aspect to effect hitting the budget targets will be additional currency vulnerability if GDP growth rates fail to meet expectations. In the budget statement, Australian Treasurer Morrison announced measures to boost infrastructure spending. The government is planning a second international airport for Sydney together with a substantial package for road and rail investment. The total spending commitment on capital projects amounted to AUD 75 billion over the next ten years.
In March 2017, German production in industry was down by 0.4% from the previous month on a price, seasonally and working day adjusted basis according to provisional data of the Federal Statistical Office (Destatis). In February 2017, the corrected figure shows an increase of 1.8% (primary +2.2%) from January 2017.
Germany exported goods to the value of 118.2 billion euros and imported goods to the value of 92.9 billion euros in March 2017. These are the highest monthly figures ever reported for both exports and imports. German exports increased by 10.8% and imports by 14.7% in March 2017 year on year. The foreign trade balance showed a surplus of 25.4 billion euros in March 2017. In March 2016, the surplus amounted to 25.8 billion euros.
The number of U.S. job openings was little changed at 5.7 million on the last business day of March, the U.S. Bureau of Labour Statistics reported overnight. Over the month, hires and separations were also little changed at 5.3 million and 5.1 million, respectively.
The U.S. Wholesale Business Inventories grew 0.2% during the month of March, beating expectations, a rate slightly down from February's 0.4% figure. Economists polled by Thomson Reuters were expecting wholesale inventories to fall 0.1% in March.
The IBD/TIPP Economic Optimism Index, a leading national poll on U.S. consumer confidence, indicates that consumer confidence has held steady, with the May reading at 51.3, little changed from April when the index stood at 51.7. This remains slightly above the 12-month average of 51. It also marks the eighth consecutive month above 50, which indicates optimism.
Global equity markets are mainly higher - Dow -0.06%, S&P 500 -0.02%, FTSE +0.57%, DAX +0.43%, CAC -+0.28%, Nikkei -0.26%, Shanghai +0.06%.
Gold prices are down $11 or 0.9% trading at $1,216 an ounce .WTI Crude Oil is down 0.6% currently trading at $46.05 a barrel
The NZDUSD opens at 0.6914 (mid-rate) this morning.
The NZD has had a reasonable start to the week making small gains against all its rivals and one of the few currencies to hold its own against a rising USD. The NZDUSD had traded up as high as 0.6940 during our trading day but lost momentum as the US dollar index (DXY) turned positive.
With yesterday's French Presidential election delivering the expected result investor focus switched from political concerns, to the weekend's economic data releases. The stronger than expected US employment report appears to be the main driver for the strengthening USD with the market as of this morning now fully pricing in a hike in US interest rates from the Federal Reserve at their next meeting on June 15th.
Overnight Germany's factory orders increased for the second consecutive month in March, growing by 1% m/m after a revised 3.5% increase in February. The result was in line with expectations.
Global equity markets are mixed - Dow -0.05%, S&P 500 -0.05%, FTSE +0.05%, DAX -0.18%, CAC -0.91%, Nikkei +2.31% Shanghai -0.79%.
Gold prices are unchanged trading at $1,227 an ounce .WTI Crude Oil are little changed currently trading at $46.32 a barrel
The NZDUSD opens at 0.6905 (mid-rate) this morning.
The NZD rallied on Friday, making steady gains against all its major rivals after Friday's inflation expectations report showed New Zealand firms had raised their expectations for inflation over the next two years above 2% for the first time since 2015.
Strong jobs data out of the US on Friday was countered by disappointing wage growth. The non-farm payroll report showed employment surged by 211k jobs in April well ahead of the expected 185k increase. Although March's 85k increase in jobs was downwardly revised to a 79k increase the unemployment rate edged down to a 10yr low of 4.4% in April from 4.5% in March. Economists had expected unemployment to increase to 4.6%.
As expected centrist candidate Emmanuel Macron has decisively won the French presidential election to become the youngest president in the country's history. Earlier this morning the election results showed Mr Macron defeated far-right candidate Marine Le Pen by an estimated 65.5% to 34.5% majority.
There is very little in the way of local economic data until Thursday's RBNZ Monetary Policy Statement. The RBNZ are expected to keep the OCR unchanged at 1.75%.
Global equity markets closed out the week broadly higher- Dow +0.26%, S&P 500 +0.40%, FTSE +0.68%, DAX +0.55%, CAC +1.12%, Nikkei +0.70%, Shanghai -0.788%.
Gold prices were down 3.3% over the course of the week closing on Friday at $1,227 an ounce .WTI Crude Oil rallied on Friday after it was reported that Saudi oil export loadings fell by more than 670,000 barrels a day in the month of April closing out the week at $46.22 a barrel.
The NZDUSD opens at 0.6875 (mid-rate) this morning.
Broad USD strength on the back of better-than-expected US economic data releases has seen the NZDUSD retrace yesterday morning's sharp rise following the release of our quarterly employment report.
Ahead of this morning's FOMC statement strong non-manufacturing and service data on top of slightly better than expected private sector employment report out of the US saw the greenback rise against all its major trading partners. The ADP report showed private sector employment climbed by 177k jobs in April after surging up by a downwardly revised 255k jobs in March. Economists had forecast an addition of 175k jobs in addition to the previously reported 263k jobs for the month of March.
US non- manufacturing and service sector growth both exceeded expectations with the service index rising to 53.1 (exp 52.5) and the non-manfacturing index spiking to 57.5 (exp 56.1).
There were no surprises in this morning's FOMC statement where the Fed voted unanimously to leave its interest rate unchanged at 0.75% to 1%, although the statement has been viewed as slightly â€œhawkishâ€ with the Fed still â€œexpecting the economy to warrant gradual rate hikes.â€
Global equity markets are mixed - Dow -0.09%, S&P 500 -0.21%, FTSE -0.21%, DAX +0.16%, CAC -0.06%, Nikkei Closed Shanghai -0.27%.
Gold prices continue to edge lower, down 0.6% currently trading at $1,247 an ounce .WTI Crude Oil are little changed currently trading at $47.81 a barrel
The NZDUSD opens at 0.6930 (mid-rate) this morning.
A further increase in global dairy prices has helped support the NZD. Ahead of the latest dairy auction the NZDUSD had been threatening to push back below 0.6900 bur rose sharply on the back of a fourth consecutive rise in dairy prices.
Prices in the latest Global Dairy Trade (GDT) auction rose 3.6% following a 3.1% gain at the previous auction a fortnight ago. Whole Milk Powder prices were up a further 5.2% to $3,233/MT following a 3.5% increase previously. Skimmed Milk Powder decreased marginally by 0.9% while the standout performer was butter milk powder which gained 21.8%.
Overnight Euro-zone manufacturing PMI printed in line with expectations while the British pound was boosted after the Markit/CIPS Purchasing Managers' Index for the manufacturing sector unexpectedly rose to 57.3 in the month of April. Economists had been expecting the index to pull back to 54.0 following March's 4-month low of 54.2 result.
Further direction for the NZD will be dictated by this morning's quarterly employment report and labour cost index due for release at 10:45.
Global equity markets are broadly higher - Dow +0.11%, S&P 500 +0.08%, FTSE +0.64%, DAX +0.56%, CAC +0.70%, Nikkei +0.70%, Shanghai -0.35%.
Gold prices have edged down 0.2% currently trading at $1,255 an ounce .WTI Crude Oil continues to fall down 2.1% overnight currently trading at $47.83 a barrel
The NZDUSD opens at 0.6909 (mid-rate) this morning.
After five consecutive daily losses and trading to 9 months lows against the USD the NZD along with the AUD have rallied circa 1% against the majors. The push higher against the USD comes on the back of further disappointing US economic data.
Overnight US personal spending and personal income came in slightly lower than forecast, while manufacturing PMI and construction spending were very disappointing with construction spending unexpectedly decreasing during the month of March after spiking 1.8% in February. Economists had expected spending to increase by 0.5%. The ISM purchasing managers index fell more than expected in April with the report showing the index fell to 54.8 after rising to 57.2 in March. The index had been expected to edge down to 56.6.
This afternoon manufacturing data out of China and the RBA cash rate statement will be the highlights, with the RBA expected to keep their OCR unchanged at a record low of 1.5%.
UK and European equity markets were closed yesterday - Dow +0.02%, S&P 500 +0.31%, FTSE Closed DAX Closed, CAC Closed, Nikkei +0.59%, Shanghai +0.08%.
Gold prices are down 0.8% currently trading at $1,267 an ounce .WTI Crude Oil is down 1% overnight currently trading at $48.85 a barrel
The NZDUSD opens at 0.6860 (mid-rate) this morning.
Markets were subdued going into month-end, (and for many a bank holiday weekend) on Friday with both currency and equity markets showing little reaction to a raft of economic data releases.
On the whole UK, Euro-zone, and US economic data releases all fell short of expectations. The release of flash/advanced quarterly GDP estimations for all three regions disappointed with the UK and Euro-zone readings falling just short of expectations, up 0.3% Vs 0.4%, while the US advanced GDP was particularly disappointing increasing by 0.7% in Q1 well short of the forecast 1.3% growth, following on from a stellar 2.1% reading in the fourth quarter.
The week ahead offers plenty in the way of both domestic and international data releases with Tuesday night's GDT auction, Wednesday's quarterly employment data and Friday's inflation expectations report the pick of the domestic data releases. On the international data front we have monetary policy statements out of the RBA and the US Federal Reserve as well as the French Presidential elections to look forward to.
Global equity markets closed out the week slightly lower- Dow -0.19%, S&P 500 -0.19%, FTSE -0.46%, DAX -0.05%, CAC -0.08%, Nikkei -0.29%, Shanghai +0.08%.
Gold prices were down 1.6% over the course of the week closing on Friday at $1,267 an ounce .WTI Crude Oil was little changed on Friday closing out the week below $50 at $49.33 a barrel.
The NZDUSD opens at 0.6877 (mid-rate) this morning.
The NZD was the worst performing currency of the majors overnight. The Kiwi has traded a 203 point or 2.9% range this week from the high on Monday, and is down 6.8% from the 2017 high of 0.7376
Last night the Governing Council of the ECB decided that the 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% respectively.
The Governing Council continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time, and well past the horizon of the net asset purchases.
Filings for U.S. unemployment benefits rose to a four-week high last week, interrupting a run of subdued firings, a Labour Department report showed overnight. Jobless claims increased by 14,000 to 257,000 (forecast was 245,000) in the week ended April 22.
The U.S. Pending Home Sales Index, a forward-looking indicator based on contract signings, declined 0.8% to 111.4 in March from 112.3 in February. Despite last month's decrease, the index is 0.8% above a year ago.
Global equity markets are mixed: Dow +0.05%, S&P 500 +0.06%, FTSE -0.71%, DAX -0.23%, CAC -0.31%, Nikkei -0.19%, Shanghai +0.36%.
Gold prices are down 0.1% currently trading at $1,264 an ounce. WTI Crude Oil is down 1.2% overnight currently trading at $49.16.
The NZDUSD opens at 0.6895 (mid-rate) this morning.
The NZD continues to underperform on broad USD strength. The USD has clawed back some of its recent losses against both the JPY and the EUR on anticipation that this morning's tax reform announcement could boost the Dollar. The dollar index (DXY) is currently up 0.5%.
This morning White House Treasury Secretary Steven Mnuchin announced what the Trump administration is calling â€œthe biggest tax cuts in historyâ€. The plan is to slash US corporate tax rates from 35% to 15% as well as reducing individual income tax brackets from seven to three (10%, 25%, 35%). The plan if passed will also eliminate inheritance taxes and include a one-time tax on corporate profits overseas that would allow companies to repatriate funds to the United States. Initial reaction to the reforms is that it is a tax cut for the wealthy that will benefit Wall Street and Trump.
Overnight, tonight investors will look to the ECB Minimum Bid Rate announcement as well as US durable goods and weekly employment reports for further direction.
Global equity markets continue to strengthen - Dow +0.17%, S&P 500 +0.23%, FTSE +0.18%, DAX +0.05%, CAC +0.19%, Nikkei +1.10%, Shanghai +0.20%.
Gold prices are holding steady currently trading at $1,265 an ounce .WTI Crude Oil is slightly higher up 0.5% overnight currently trading at $49.75.
The NZDUSD opens at 0.6945 (mid-rate) this morning.
The NZD has been the worst performer of the G10 currencies and it's difficult to see why. After failing to break up through 0.7050 resistance against the USD on Monday the NZD quickly reversed lower. Despite improved risk sentiment after the French election's first round outcome and an absence of any local economic data releases investors seem to be reacting to Trump's protectionist policies, with the US President due to announce tax reforms later today.
Overnight US economic data releases delivered mixed signals to investors with consumer sentiment fall short of expectations while new home sales spiked 5.8% in March. After two consecutive monthly rises in confidence in the US, economists had expected to see the index dip from 125.6 to 123.1, with last night's 120.3 result slightly worse than expected. Conversely The Commerce Department's new home sales report showed sales surged 5.8% to an annual rate of 621k in March with February's previously reported 585k result upwardly revised to 587k.
Global equity markets are broadly higher - Dow 1.21%, S&P 500 +0.71%, FTSE +0.15%, DAX +0.10%, CAC +0.17%, Nikkei +1.08%, Shanghai -0.16%.
Gold prices are down 1% currently trading at $1,262 an ounce .WTI Crude Oil is now trading below $50 a barrel at $49.48.
The NZDUSD opens at 0.7035 (mid-rate) this morning.
This morning French voters delivered the result the markets were hoping for with independent centrist Emmanuel Macron and far-right Europhobe Marine Le Pen advancing to the next round of voting on the 7th May. Marcon won 23.7% of the vote with Le Pen close behind with 21.7%. The result has seen the EUR gap 2% higher from Friday's close as many now believe that supporters for Republican candidate and third place contender, Francois Fillon, will support Macron.
On Friday a stellar US existing home sales report had little effect on the dollar. The report showed existing home sales spiked 4.4% to an annual rate of 5.71 million in March reversing February's 3.9% fall.
Late on Friday the UK's Office for National Statistics released a disappointing retail sales report for the month of March. The report showed retail sales fell 1.8% month-on-month in March. Economists had expected to see a slight fall of 0.5% from February's revised 1.7% rise.
Global equity markets closed out the week mixed- Dow -0.15%, S&P 500 -0.30%, FTSE -0.06%, DAX +0.18%, CAC -0.37%, Nikkei +1.03%, Shanghai +0.03%.
Gold prices were unchanged on Friday closing out the week at $1,284 an ounce .WTI Crude Oil continued to fall on Friday down 7.4% on the week closing on Friday at $49.62 a barrel.
The NZDUSD opens at 0.7013 (mid-rate) this morning.
The NZDUSD traded a 52 point range or 0.74% in the last 24 hours. The Kiwi rallied strongly after yesterday's better than expected CPI but slipped back again in the US session to open modestly higher against most currencies.
Results from the April U.S. Manufacturing Business Outlook Survey suggest that regional manufacturing activity continued to expand, but at a slower pace than last month. The index for current manufacturing activity in the region decreased from a reading of 32.8 in March to 22.0 this month.
In the week ending April 15, the advance figure for U.S. seasonally adjusted initial claims was 244,000, an increase of 10,000 from the previous week's unrevised level of 234,000. The 4-week moving average was 243,000.
Data releases tonight include CAD CPI, US PMI and Existing Home Sales, FOMC Member Kashkari Speaks, and International Monetary Fund Meetings are held Saturday and Sunday.
European equity markets are higher: Dow +0.98%, S&P 500 +0.87%, FTSE +0.06%, DAX +0.09, CAC +1.48%, Nikkei -0.01%, Shanghai -+0.04%.
Gold prices are down 0.1% currently trading at $1,281 an ounce .WTI Crude Oil is currently down 0.7% trading at $49.90 a barrel.
The NZDUSD opens at 0.7005 (mid-rate) this morning.
The NZDUSD failed to break above 0.7050 during our trading day, yesterday and opens this morning on the brink of trading back below 0.70. There was very little in the way of economic data overnight and the move lower looks to be on the back of USD strength which has seen US Treasury bond yields push higher. The 10-year T-Bond yield is currently up 2% on the day.
Overnight UK MP's backed Theresa May's motion to hold a snap election on the 8th June by a massive margin of 522 to 13. A two-thirds majority was required to pass the motion.
Crude oil prices have plummeted on the back of an increase in production and a smaller-than-expected decline in US crude inventories. This morning's Energy Information Administration (EIA) report showed a decline in crude oil stocks of 1mill barrels on the week, slightly less than estimates, while concerns over rising oil output in the US has been the main catalyst for the fall in prices.
This morning's CPI data release due to hit the tapes at 10:45 will be the key driver for the NZD today. Economists are expecting to see a strong gain of 0.8% for Q1 2017 after Q4 2016 edged up 0.4% slightly ahead of the expected 0.3% result.
European equity markets are mixed - Dow -0.37%, S&P 500 -0.06%, FTSE -0.46%, DAX +0.13%, CAC +0.27%, Nikkei +0.07%, Shanghai -0.81%.
Gold prices are down 0.6% currently trading at $1,282 an ounce .WTI Crude Oil has plunged overnight currently down 4.3%% trading at $50.25 a barrel.
The NZDUSD opens at 0.7037 (mid-rate) this morning.
Once again geopolitical news has dominated markets after UK Prime Minister Theresa May announced a snap general election for June 8. The GBP which initially plunged on the announcement has since surged higher and is the strongest performing currency over the past 24hrs. With the FTSE 100 leading the way (closing down 2.46%) global equity markets have turned negative.
This morning's global dairy trade auction (GDT) has seen the price index rise for the third consecutive time increasing by 3.1% with average prices of $3,139. Whole milk power increased by 3.5% to $2,998 a tonne, while skim milk power and butter prices were standout performers increasing by 7.1% and 6.0% respectively from the previous auction a fortnight ago.
This morning's US housing starts data release put further downward pressure on the dollar with the report showing housing starts plunged by 6.8% to an annual rate of 1.215 million in March from an upwardly revised 1.303 million in February. Economists had expected housing starts to fall by 2% to a rate of 1.262 million from the 1.288 million originally reported for the previous month.
European equity markets are broadly lower - Dow -0.49%, S&P 500 -0.26%, FTSE -2.46%, DAX -0.90%, CAC -1.59%, Nikkei +0.35%, Shanghai -0.79%.
Gold prices are edging higher currently trading at $1,290 an ounce .WTI Crude Oil is slightly lower down 0.2% trading at $52.53 a barrel.
The NZDUSD opens at 0.7005 (mid-rate) this morning.
Investors remain cautious as geopolitical instability continues to dominate the news. The NZDUSD traded to a high of 0.7035 on a combination of better-than-expected China data and disappointing US economic data.
China's GDP and Industrial production growth were both ahead of economists' estimates with Q1 GDP expanding at 6.9% y/y (exp 6.8%) while Industrial production growth spiked to 7.6% in March (exp 6.3%) after recording 6.3% growth in both January and February.
On Friday the US Labor Department consumer price index fell by 0.3% in March after recording a small increase (+0.1%) in February, while retail sales in the month of March fell by 0.2% with February's previously reported 0.1% uptick downwardly revised to a 0.3% fall.
The French presidential election is looking more and more unpredictable with four candidates having a realistic chance of making it through to the second round after this weekend's first round vote. The latest polls show conservative FranÃ§ois Fillon and communist Jean-Luc MÃ©lenchon have seen late surge in voter support and are within reach of the current front runners' centrist Emmanuel Macron and far-Right leader Marine Le Pen.
Domestic highlights for the NZD this week are likely to be tonight's Fonterra auction and Thursday's quarterly CPI data release.
European equity markets closed lower ahead of the long weekend, but this morning US markets are in positive territory - Dow +0.64%, S&P 500 +0.6%, FTSE -0.29%, DAX -0.38%, CAC -0.59%, Nikkei +0.11%, Shanghai -0.74%.
Gold prices are up 15 from Friday trading at $1,287 an ounce .WTI Crude Oil is down 1.1% from last week's close currently trading at $52.65 a barrel.