The Kiwi Dollar opens the day barely changed from yesterday in what has been a quiet start to the week with the Labour Day Holiday in the U.S. Most currencies have traded narrow ranges apart from the British Pound which lost over 1% overnight as markets became nervous ahead of the re-opening of parliament and the risk of a potential general election.
China Taking U.S to WTO
News overnight that China is lodging a complaint with the World Trade Organisation over the recent U.S tariff actions. Reports have suggested that the US and China are struggling to agree on a schedule for a planned meeting this month to continue trade talks, and the latest move from China will lessen the likelihood of an early resumption of the negotiations. The delays will continue to weigh on market sentiment and risk appetite.
Political Uncertainty Weighs on Pound
The Pound took a tumble overnight giving back most if its recent gains with the chances of a snap election becoming increasingly high if Parliament votes to block a hard Brexit. Boris Johnson said “there are no circumstance which I will ask Brussels to delay”, and while he insisted he didn’t want a general election, there have been reports from senior officials that he planning for an election on October 14 if he loses the crucial no-deal Brexit vote this week. Also weighing on the GBP was weaker than expected manufacturing data released overnight, with the PMI reading falling to its lowest level in seven years.
RBA Rate Decision This Afternoon
The day ahead sees some big ticket items out of Australia, with retail sales and current account data released at 1.30pm this afternoon, followed by the Reserve Bank official interest rate decision at 4.30pm. The majority of Australian economists are expecting no change to rates in September, but are expecting a further cut in either October or November. However there is always the chance of a surprise today, as we saw from the RBNZ last month.
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