The Kiwi Dollar pushed higher overnight reaching a new 3 month high as short NZD positions continued to be unwound. Global markets were mainly focussed on Brexit Developments, with the British Pound coming under heavy selling pressure as PM Theresa May found little local support for her proposed deal. Most NZD cross rates have made good gains overnight, with the big performer being the NZD/GBP which is up around 2.5%. The US Dollar was steady as retail sales for October came in better than expected, up 5.9% from the same month a year ago, and up 0.8% from September vs market expectations of 0.5%.
Hours after British Prime Minister Theresa May announced a tentative deal charting the UK exit from the European Union and assuring the public that her Cabinet supported it, two key ministers abruptly quit her government in protest over the proposed pact. Their departure, and the exit of two other junior ministers, deals a serious blow to May, whose political survival is closely linked to Brexit. The resignations included Brexit Secretary Raab and Northern Ireland Minister Vara, which triggered the GBP sell off. Prime Minister Theresa May will now likely face a threat to her leadership as the agreement does not have widespread support. Also weighing on the Pound was worse than expected retail sales data which saw year on year sales for October fall to 2.2% vs expectations of 2.8%.
Closer to home, the AUD was boosted yesterday by a stronger than expected jobs report. Figures showed the unemployment rate fell to 5.0% in September, down from 5.3% in August, the lowest level in over 6 years. With both the AUD and NZD making good gains, the NZD/AUD cross rate has remained fairly flat and trades at similar levels to yesterday.
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