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.
© Copyright - EncoreFX, 2018.The information in this post is provided for general information purposes only and has been prepared without taking into account any person’s objectives, financial situation or needs and, accordingly, it does not constitute personalised financial advice under the Financial Advisers Act 2008, nor does it constitute advice of a legal, tax, accounting or other nature to any person. Before acquiring any financial services or products from EncoreFX, you should consider the appropriateness of the information having regard to your own objectives, financial situation or needs. We recommend that investors seek advice from their usual adviser before taking any action. EncoreFX (NZ) Ltd is a registered Financial Services Provider (FSP 461386), and is a licensed derivatives issuer under the Financial Markets Conduct Act 2013. EncoreFX (NZ) Ltd has lodged a Product Disclosure Statement (PDS) for each of our derivatives with the Registrar on 21-Dec-2016. A copy of each PDS is available from us or from the Registrar at www.business.govt.nz/disclose.