The Kiwi Dollar opens the day up on yesterday as the US Dollar continued to drift lower. Currency movements were generally on the smaller side, as the market awaits the outcome of the Xi-Trump meeting at the G20 summit later in the week, while locally, all eyes will be on the RBNZ OCR decision due out at 2pm tomorrow.
USD Eases vs Major Currencies
The US Dollar was weaker against most currencies, albeit modestly, as the market awaits events later in the week. There is optimism that the Xi-Trump talks will deliver some positive signals with hope that the U.S wont impose further tariffs on China, and that the two sides will agree to further trade talks. There are positive and negative factors currently influencing the Greenback, but the threat of the Fed embarking on a significant easing cycle is perhaps the biggest concern. Federal Reserve Vice Chairman Richard Clarida said that the broad outlook for the US economy remains positive and he expects economic expansion to continue, however, added that the central bank is also prepared to reduce interest rates if trade and other uncertainties put that outlook at risk. US Data due out later this week will be closely watched, including Consumer Confidence tonight, Durable Goods tomorrow night, and US GDP on Friday morning.
RBNZ Decision Tomorrow
While overseas factors continue to influence the direction of the NZD, the big event for the Kiwi this week is the RBNZ rate decision tomorrow. The Central Bank cut the OCR by 25 basis points to a record low 1.50% in May, and has left the door open for more cuts. Markets are pricing in no cut tomorrow, but are expecting the RBNZ to pave the way for another rate cut on August 7th. There is the potential for a surprise early move tomorrow with markets pricing in a 20-30% chance of a cut.
Euro Hits 3 Month High
The EUR surged vs the USD overnight, hitting its highest level since March.
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