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Kiwi Lower as Risk Off Tone Returns

Published November 15, 2019

The Kiwi Dollar opens lower this morning as commodity currencies took a hit as a risk-off tone returned to markets. The change in market sentiment was driven by a flow of mainly negative news including US – China trade talks, the ongoing situation in Hong Kong, and weak data releases out of China, Japan, and Australia yesterday. Both the NZD and AUD are weaker and down on most major cross rates.

Australian Unemployment Rises

Unemployment for October rose to 5.3% from 5.2% in September as the economy lost 19,000 jobs. Markets were expecting jobs to increase by 15,000 with the unemployment rate to stay steady at 5.2%. The Australian Dollar fell on the negative numbers with analysts suggesting that the RBA will be forced to cut rates again in February if unemployment continues to rise. Also weighing on the Aussie was worse than expected data out of China, with retail sales growing at 7.2% vs market expectations of 7.8%.

NZD Gives Back OCR Decision Gains

The NZD drifted back yesterday, unable to hold on to the gains made on the back of the RBNZ decision to hold the OCR at 1%. Yesterday saw several RBNZ officials making speeches or being interviewed about the decision. Nothing ground breaking was revealed, with the main message being that the bank was comfortable with the current levels and remained alert to provide further economic stimulus if conditions worsened.

The Day Ahead

Not much on the local front today, with NZ manufacturing PMI out later this morning. Major data out of the US tonight with retail sales expected to have increased by 0.2% in October.

Rees Logan, Adam Nikitins and Stewart McCallum were appointed Joint and Several Voluntary Administrators of EncoreFX (NZ) Limited on 30 March 2020. Adam Nikitins and Stewart McCallum were appointed Joint and Several Voluntary Administrators of EncoreFX (Australia) Pty Ltd on 30 March 2020. Any queries regarding the Administrations should be directed to restructuring@nz.ey.com.