EncoreFX’s daily market updates are written by our experienced and professional dealing team.
The Kiwi Dollar opens lower this morning dragged down by a weaker Australian Dollar after worse than expected GDP numbers yesterday. Commodity currencies were the worse performers overnight with the Canadian Dollar also losing ground on the back of a less hawkish Bank of Canada statement.
Australian GDP Disappoints
Australian GDP came in at 2.3% for the year, below market expectations of 2.7%. The weaker than expected number cast doubts on RBA projections earlier in the week that the economy would grow by 3% in 2019. Annualized growth for the second half of 2018 was just 0.9%, quite a reduction from the 3.8% for the first half of the year. It raises concerns that the RBA will eventually be forced to cut interest rates, with some Australian Banks already predicting cuts in July and August. Only a couple of hours earlier, RBA Governor Lowe had maintained his positive tone suggesting that growth would recover and policy could be held steady. The Aussie dropped by half a cent, dragging the Kiwi with it, while NZD/AUD cross rate made some ground above the 96 cent level. More potential volatility today with Australian Retail Sales, and Trade Balance numbers released at 1.30pm this afternoon.
US Trade Deficit Widens
The US trade deficit surged to $59.8B in December against expectations of $57.3B, despite President Trump efforts to lower the imbalance through a series of tariffs implemented through the year. The number raises the stakes on US-China trade negotiations with pressure on President Trump to finalize a deal to help the US export sector. The greenback ran into selling pressure on the back of this and perhaps contributed to some damage control on the NZD and AUD which found some support overnight.
© Copyright - EncoreFX, 2018.The information in this post is provided for general information purposes only and has been prepared without taking into account any person’s objectives, financial situation or needs and, accordingly, it does not constitute personalised financial advice under the Financial Advisers Act 2008, nor does it constitute advice of a legal, tax, accounting or other nature to any person. Before acquiring any financial services or products from EncoreFX, you should consider the appropriateness of the information having regard to your own objectives, financial situation or needs. We recommend that investors seek advice from their usual adviser before taking any action. EncoreFX (NZ) Ltd is a registered Financial Services Provider (FSP 461386), and is a licensed derivatives issuer under the Financial Markets Conduct Act 2013. EncoreFX (NZ) Ltd has lodged a Product Disclosure Statement (PDS) for each of our derivatives with the Registrar on 21-Dec-2016. A copy of each PDS is available from us or from the Registrar at www.business.govt.nz/disclose.