The Kiwi Dollar gave back most of its gains made over the weekend, drifting lower as the USD recovered overnight. The Greenback was higher against most currencies as the market reacted positively to President Trump’s announcement to suspend the plan to impose 5% tariffs on Mexico. Also weighing on the NZD was the release of Chinese trade data yesterday, which showed a much larger than expected fall in imports. This has reignited concerns that the Chinese economy is slowing and saw both the NZD and AUD run into selling pressure.
Trade War Concerns Continue
While there was positive news on the Mexican tariff front, there was no fresh news on the U.S – China trade stalemate. President Trump said overnight that while he was scheduled to meet with President Xi at the end of the month, if the meeting didn’t take place he would look to increase tariffs on the remaining $300b worth on Chinese imports immediately. The proposed meeting at the G20 summit in Japan is now looming as a major risk event for markets.
UK GDP Falls Sharply
The Pound moved lower overnight as UK GDP contracted sharply in April by -0.4% vs market expectations of -0.1%. This marks the second consecutive monthly fall and the largest monthly slump since December.
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