The New Zealand dollar opens lower against all major currencies this morning as optimism fades on trade talks.
Trade Hopes Dim
Trade optimism faded overnight as it appears unclear if any trade talks are taking place, with China’s Foreign Ministry re-iterating that it had not received any recent phone call from the US. The US yield curve inverted to its deepest level not seen since 2007, stoking fears of a recession and sparking a sell-off in global stocks and saw markets return to safe-haven currencies.
US Consumer Confidence Upbeat
US consumer confidence dipped in August to 135.1 from an upwardly revised 135.8 the month prior, however was much more than the forecasted 129.5. Households have remained confident about the labour market and willing to spend despite escalating trade tensions. However, expectations are for consumer sentiment to dampen, should trade tensions persist.
German Q2 GDP Contraction
The German economy contracted by a seasonally adjusted 0.1 percent in the three months to June 2019 as forecasted, and following 0.4 percent growth in the previous period. The report showed a collapse in exports is weighing enough on the country’s economy to push it into contraction territory and supports the market expectation that GDP will shrink by around 0.25% in Q3, pushing the German economy into a “technical recession”.
Tomorrow morning, we see the release of the ANZ Business Confidence survey for August with expectations for an increase in negative business sentiment.
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