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Kiwi Drifts Lower Ahead of U.S CPI Tonight

Published June 12, 2019

The NZ Dollar has again drifted lower as the US Dollar continued to claw back losses from last week. There has been a lack of major data releases, with headlines instead being dominated by a flurry of tweets from U.S President Trump. The Kiwi is down on all major cross rates and will look to tonight’s U.S CPI number, and tomorrow’s Australian Employment data for direction. The other major event tonight is ECB President Draghi speaking in Frankfurt where the market will be watching for more clues on monetary policy direction.

Trump Takes Aim at Fed and ECB

President Trump once again criticized the US Fed for its tightening of monetary policy, and also took aim at the ECB and other central banks for keeping their currencies at low levels. Trump accused Europe of devaluing their currency, tweeting that “the Euro and other currencies are devalued against the dollar, putting the U.S at a big disadvantage”. On the Fed, he tweeted “the Fed interest rate way too high, added to ridiculous quantitative tightening! They don’t have a clue!” . Markets have priced in an 80% chance of a Fed rate cut in July.

Business Confidence up in Australia

The AUD made ground yesterday as business confidence came in stronger than expected, before giving back these gains on the back of a stronger USD. Market focus is squarely on tomorrows labour market data, with a weak number likely to confirm a July interest rate cut from the RBA.