The Kiwi Dollar opens higher this morning back up near the 66 US cent level as markets gradually wind down ahead of the Christmas break. The NZD found support on the back of a stronger AUD which made ground after slightly better than expected employment data released yesterday. Otherwise, market movements have been fairly subdued as risk appetite dwindles ahead of the holiday break.
NZ GDP Meets Expectations
GDP data released yesterday showed annual economic growth of 2.3% which was bang on market expectations. However Q3 growth was slightly above market consensus coming in at 0.7% vs an expected 0.5%. The NZD received an immediate boost before drifting back in the afternoon.
Trump Impeachment Has Little Impact on Currencies
News of President Trump’s impeachment has had little impact as markets continue to shrug off the headlines and remain calm since the odds of a Senate conviction, which would require the support of at least 20 Republican senators, are low at this point. Senate Majority Leader Mitch McConnell has confirmed the unlikelihood yesterday after telling reporters there is “no chance” his chamber will remove Trump from office.
UK and Japan Leave Rates Unchanged
Quite a few central bank rate decisions overnight, the biggest two being from Japan and UK with both keeping rates unchanged. Japanese Governor Haruhiko Kuroda warned that the risks to Japan’s economic recovery remain high, even with the US-China phase one deal slightly improving the global economic outlook. Kuroda also acknowledged there is a limit to how much the BOJ could depress interest rates since extended periods of negative borrowing costs could damage the nation’s financial institutions. The Bank of England also kept rates unchanged, although two of the nine committee members voted for a 25-basis point cut in rates. Bucking the no change tend was Sweden which raised rates from 0.25% to 0%, ending almost 5 years of negative interest rates.
The Day Ahead
Fairly quiet on the local front today, but some big data overseas tonight including UK GDP, US GDP, and the closely watched University of Michigan sentiment survey for December.
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