EncoreFX’s daily market updates are written by our experienced and professional dealing team.
The NZD opens the day steady, continuing to hold around the 70 cent level. Best performing currencies have been the AUD and EUR, while the Greenback found support after positive trade data released overnight.
The Australian economy has grown much faster than expected with Q1 2018 GDP up 3.1% compared to 2.4% in Q4 2017. Markets had been expecting a number around 2.7 – 2.8% and the AUD has rallied on the back of this, gaining 0.7% from yesterday. While the economy is growing strongly, it is unlikely to bring forward any interest rate hikes as the RBA had already noted a pick up in economic growth in their statement earlier in the week. Unemployment, wages, and CPI will continue to be the main drivers of RBA policy. With the AUD higher and the NZD remaining steady, we have seen the NZD/AUD drift lower from yesterday.
The American trade deficit fell to a seven month low as exports lifted to a record high. The trade balance dropped 2.1% to USD46.2 billion, the smallest number since September last year. Markets had been expecting a deficit of USD49 billion, and this surprise has added weight to the case for a strong Q2 GDP result.
The Euro found good support overnight as senior ECB officials hinted at a planned ending of their stimulus programs towards the end of the year. The ECB Chief Economist confirmed that the Governing Council will be considering “whether the progress so far has been sufficient to warrant a gradual unwinding of our net asset purchases”. The next ECB policy meeting is on June 14th.
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