The New Zealand dollar remains softer following a gloomier outlook from NZ businesses.
NZ Business Expectations Hit Decade Lows
The closely watched ANZ Business Confidence survey tumbled showing -52.3 of respondents found deteriorating business conditions in August, up from -44.3 in the previous month . Falling to its lowest reading since April 2008 due to increasing domestic and global headwinds. Businesses’ views of their own activity over the year ahead fell to -0.5% in August from 5% in July, the lowest reading in over a decade. The report showed firms intend to cut jobs, and both investment and profit expectations also dropped.
The NZD fell to 4-year lows on the announcement and markets are now pricing in an 80% chance of a further 25 basis point cut in November which will bring the official cash rate down to 0.75% and potential for a further cut to 0.5% in 2020.
USD Higher on Revived Trade Hopes
The USD benefitted on news that the US and China have had discussions on resuming trade negotiations in September. China hopes the US would also cancel the additional tariffs set to take effect on 1st September. President Donald Trump has said in a media interview that trade talks were scheduled for Thursday “at a different level”, but did not provide any further detail.
US Q2 GDP Softens
The US economy grew by an annualized 2% in the second quarter of 2019, marginally lower than the 2.1% initially reported. The report showed the strongest consumer spending in over 4-years as their labour market remains firm, however was offset by declining exports and remains under threat from the year-long US-China trade war.
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