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Kiwi Retreats as US-China trade spat continues

Published September 25, 2018

The Kiwi retreated overnight amid concerns over the US-China trade tariff standoff.

Fresh US and China tariffs took effect on Monday with US tariffs on 200bln worth of Chinese goods and China’s retaliatory tariffs of 60bln on US goods. Neither of the world’s two biggest economies seem to show any signs of backing down on a bitter trade war. China has said the US is trying to force it to submit on trade as new tariffs kick in and accused the US of engaging in “trade bullyism” by intimidating other countries to submit to its will. China called off trade talks planned for next week and is unlikely to resume talks until after the November mid-term elections.

Draghi’s comments buoy the Euro

The European Central Bank President Mario Draghi predicted a pickup in underlying inflation and said the bank would push on with plans to phase out its Quantitative Easing program. The Euro rose on the back of the hawkish comments.

Pound gets a boost after comments by British Brexit Secretary Dominic Raab

The Pound has reversed some of its big losses from Friday as the GBP fell sharply following the EU summit in Salzburg amid talk of a second UK referendum on the final Brexit deal. Brexit Secretary Raab said on Monday that he was confident that the UK will make progress and eventually seal a Brexit deal with the EU. GBP remains under pressure and further clarity will only come following the October and November EU summits.

No major releases today and locally we’ll be watching for any improvements on the next NZ business confidence survey released tomorrow.

Thursday is the US Federal Reserve rate announcement with a rate hike fully priced in, with markets increasingly pricing for another hike in December. Following this, we see the RBNZ rate announcement with rates expected to remain on hold.