You’re all no doubt on top of the big news overnight, Boris Johnsons elevation to UK Prime Minister elect. The fun now really starts, and it is anticipated that he will construct his cabinet and senior advisors out of his no-deal Brexit support base. He has his work cut out and we can expect a raft of senior government resignations ahead with the October 31 deadline to leave the EU looming. Surprisingly the GBP rallied slightly on the news pulling the NZDGBP cross down, but expect continued volatility to surround the GBP for the foreseeable future.
The NZD opens weaker this morning, down 70 points from it’s high as the USD strengthened in overnight trade. The currency shook off existing home sales data and the Richmond FED index releases both missing their respective marks and pushing the USD index to one-month highs.
The net effect of this means that all NZD related cross rates have moved off their highs. Now that we have the UK leadership out of the way, we stand by for the ECB meeting later this week, and their guidance, which is expected to reinforce an easing bias, with rate cuts perhaps as early as September.
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