The Kiwi Dollar continued its recent rally and opens the day at around a two week high this morning. The USD has weakened across the board as U.S retail sales data came in lower than expected.
The USD lost ground overnight after the US Commerce Department reported retail sales growth for September came in well below market forecasts. Sales edged up by 0.1% in September equalling the August result, but well below economist forecasts of a 0.5% increase. President Trump again fuelled US-China trade concerns as he made a number of anti-China comments in a TV interview, reiterating his threats to impose more tariffs and arguing that China is meddling in US elections.
After a good rally overnight, direction for the NZD today will likely be dictated by this morning’s Q3 CPI report. Markets are expecting a 0.7% increase on the quarter, with annual inflation at 1.7%. If inflation does tick higher it may push the RBNZ to update its next set of forecasts, due out in November, and increase the likelihood of the next interest rate move being upward. Current RBNZ forecasts show a 1.4% annual rate of inflation. Other potential factors for the Kiwi today are RBA Meeting Minutes released across the ditch, and later this afternoon Chinese CPI data.
Negotiations between the UK and the EU stalled over the weekend without a deal over the issue of the Irish border. The GBP was the worst performer of major currencies, as EU President Donald Tusk announced a no-deal scenario in Brexit negotiations is “more likely than ever before”. UK prime minister Theresa May has declared she “cannot agree to anything that threatens the integrity of our United Kingdom”.
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