The Kiwi Dollar opens the day barely changed, once again trading a narrow range overnight. Global Dairy Auction results released overnight showed a smaller than expected fall in the price index, but had no impact on the NZD. Currency markets have been fairly quiet with the USD generally softer against most other major currencies, as yesterday’s rally on the back of renewed risk tolerance was short lived.
Risk Sentiment Improvement Short Lived
Expectations for central bank easing might have got carried away with doubts around how effective Chinese, German and other stimulus plans might actually be. In the U.S, President Trump’s calls for the Fed to cut rates by 1% have not been met with wide agreement, with Boston Federal Reserve President Eric Rosengren reiterating that US economic conditions are still good and that lowering interest rates could destabilize the financial sector and encourage a debt build-up. Upcoming risk events for the currency markets include FOMC meeting minutes tomorrow morning, and the Jackson Hole Symposium tomorrow night.
Pound Up and Down on Brexit News
The Pound was one of the more volatile currencies overnight as Brexit news continued to keep markets guessing. UK Prime Minister Boris Johnson said that preparations for a no-deal Brexit are on track. Johnson called on Germany and France to compromise on Brexit, cautioning that the UK would be ready to leave the EU without a deal on October 31, if necessary.
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