EncoreFX’s daily market updates are written by our experienced and professional dealing team.
By Phil Lynch
The kiwi opens the day largely unchanged, with market attention centred on President Trump.
The US President suffered twin setbacks yesterday, with two former advisers facing possible prison sentences – with one of them saying Trump instructed him to commit a crime. It’s not the first time Trump has been accused of a crime – but Democrats are out for blood.
At the very least, this is expected to hut the Republican Party’s November midterm election prospects. This renewed political pressure on Trump could hurt the US dollar and allow the NZDUSD to recover some of its lost ground.
Overnight saw the release of the US Federal Reserve’s recent meeting minutes, and these highlighted the Fed’s concerns about how trade disputes are hurting US businesses and consumers. However, any US dollar weakness from this statement was short-lived, with markets still pricing in a 92% chance of a rate hike from the Fed in a months’ time.
Yesterday saw the release of New Zealand’s own Retail Trade numbers, which showed quarter on quarter growth of 1.1% in Q2. Markets had expected growth of just 0.3% in the quarter.
According to ANZ analysts, this provides upside risk of up to 0.6% to their quarter on quarter GDP growth estimate, which in turn supports the RBNZ’s lower-for-longer view. Interestingly, the stronger figures paint a vastly different picture to the recent business confidence surveys.
Prime Minister Malcolm Turnbull is expected to cling onto his seat, despite ongoing concerns of another leadership challenge. The recent spate of political unrest has unsettled Australian markets, with the ASX down 1.1% and the Aussie dollar also under pressure. This volatile situation could impact the NZDAUD significantly.
The NZDUSD seems to be taking more frequent trips down the elevator of late. However, it has climbed back onto the staircase these last few days. The next ten days are lighter in the way of economic data and focus will be on political developments.
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