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Kiwi Lower, Trump Delays Auto Tariffs

Published May 16, 2019

The Kiwi Dollar opens slightly lower this morning despite market sentiment improving overnight as President Trump announced he would delay imposing auto tariffs by up to six months. Economic data released overnight has been generally weaker than expected, with the U.S and China both announcing lower than expected numbers. Nothing on the local data front today, but there will be a lot of focus on Australian Employment numbers this afternoon. Outside of this, trade developments look set to be the main driver of currency markets in the near term.

US Retail Sales Below Expectations

US retail sales unexpectedly dropped in April as households cut back spending. The value of overall sales declined 0.2% after a 1.7% increase the prior month, which was the strongest gain since 2017. Forecasts had been for a 0.2% increase in April. It’s hard to tell what impact this had on the dollar with trade wars and tariff announcement dominating the headlines at the moment.

EUR Gains as Trump Delays Tariffs

The Euro was firmer overnight as President Trump announced he would delay a decision on auto tariffs by up to six months. The delay will bring a temporary reprieve to the EU and Japan. The announcement gave the EUR an immediate boost, after the currency had been drifting lower as Q1 GDP numbers came in slightly below market expectations.

All Eyes on Australian Employment

Perhaps the biggest potential influence on the NZD today will be this afternoons employment data out of Australia. The announcement is due at 1.30 this afternoon, with markets expecting unemployment to be flat at 5.0% for April. The result is particularly important given the emphasis the RBA has recently placed on labour market developments when announcing its monetary policy outlook.