The kiwi dollar continued to drift lower over the past 24-hours, with markets largely unfazed by the slowest growth rate posted in China for 28-years. Chinese GDP came in at 6.4%, whilst unheard of in the western world, this figure is representative of a global slowdown in demand for Chinese products. Yet there remains hope in markets, and the US dollar continues to benefit from hopes of a US-China trade agreement. As such, the NZDUSD opens a further 0.2% lower today.
Theresa May and Jacinda Ardern met overnight and were quick to agree to a trade deal, which will see New Zealand continue to trade with the UK on the same terms as if the UK were still a member of the EU. This is a good outcome for New Zealand – particularly our meat industries.
However, when May used the NZ trade deal as an example of how to strike a deal in the chamber, she was met with jeers and laughter. She was unable to layout a clear roadmap for what next with Brexit. Ministers are due to vote on a modified version of her ‘Plan B’ deal next Wednesday, despite May providing few details on how the deal would be changed.
Despite ongoing Brexit risks, the NZDGBP cross rate has remained subdued in 2019, but is poised for a bigger move once more is known about the UK’s eventual exit.
“It would impact on just about everybody, business … particularly the smaller businesses,”Jacinda Ardern, who is in London to meet Theresa May, Source: BBC
Tomorrow’s inflation numbers are forecast by ANZ, BNZ, HSBC & Kiwibank to come in at 1.8% year on year. So, what does this mean for the kiwi? In the latest RBNZ Monetary Policy Statement, the central bank had forecast inflation for the December quarter to come in at 2.0%, so a 1.8% number is a miss for them. This may reinforce their dovish lean on neutral, which would be negative for the kiwi.
When it comes to NZ economic releases, you can rest assured there will always be a more important global release just around the corner. In this case – it will be next Thursday when the US Federal Reserve meet for the first time in 2019. This will also be the first opportunity for the FOMC to formerly discuss and publish their significantly revised interest rate outlook.
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