The New Zealand Dollar opens higher this morning as the USD was broadly weaker on worse than expected manufacturing data and continued concerns over the trade war with China. The Kiwi had earlier fallen to a fresh 4 year low as it lost ground on the back of a weaker AUD yesterday afternoon. Overnight, we have seen Dairy prices weaken for the 3rd auction in a row, although with the recent depreciation in the NZD, the prices are up 1.1% in local currency terms.
U.S Data Disappoints
The USD came under selling pressure as the closely watched ISM Manufacturing PMI number for August came in well below market expectations. The index fell to 49.1 vs expectations of 51.0, with new orders falling to their lowest level since the Global Financial Crisis 10 years ago. The disappointing data has increased the likelihood of an interest rate cut from the U.S Fed. Meanwhile, trade wars continue to weigh on global markets with President Trump showing no signs of backing down on his tariff policies. Pressure continues to mount, with last night’s data sending clear signals that the US manufacturing sector is suffering under the current tariff policies.
GBP Volatile as Political Concerns Escalate
The British Pound continued its wild ride trading near a 3 year low overnight before bouncing back strongly on news that Boris Johnson had lost his working majority in parliament and future Brexit decisions might be out of his hands. Concerns over a general election remain, with opposition Labour Party leader, Jeremy Corbyn, saying he was ready to fight an election, however, his priority was to prevent a no-deal Brexit.
RBA Keeps Rates Steady
The Australian Dollar has been mixed, initially losing ground on data releases yesterday before making back some ground overnight on a weaker USD. Data released yesterday showed a much better than expected current account surplus, however this was dampened by worse than expected retail sales. The Reserve Bank didn’t spring any surprises and kept the official cash rate at 1%, however they highlighted increasing concerns over global economic growth.
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