The New Zealand Dollar opens a touch above .65, its lowest level since October. The fall was seen after the RBA signaled a rate cut is likely when they next meet on 4th June and as dairy prices fall.
The RBA released minutes of the Board’s meeting a few weeks ago and mentioned if there was “no further improvements in the labour market and unemployment rate, that inflation would likely remain low relative to the target, and that a decrease in the base rate would likely be appropriate. A lower rate would support employment growth and bring forward the time when inflation is consistent with the target. Given this assessment, at our meeting in two weeks’ time, we will consider the case for lower interest rates”. The AUD fell on the announcement dragging the NZD down with it.
NZ Dairy Prices Fall
Global Dairy Trade auctions resulted in a fall after 11 consecutive rises, falling by -1.2% with an average selling price of $3414 per tonne. The key Whole Milk Powder (WMP) price fell -2.1%, while cheddar prices surged +15% and the highest level in more than 5 years.
UK PM Theresa May Unveils New Brexit Deal
British PM May announces her fourth attempt at a “new Brexit deal”, including an option for MP’s to vote on whether to hold a second referendum. The Pound rallied on the notion of a second referendum, however quickly fell again as it became apparent the deal would not win the support of the House.
Risk Sentiment Improves as US Eases Trade Restrictions on Huawei
Global stocks edged higher as risk appetite returned following the US temporarily easing trade restrictions on Chinese company Huawei Technologies. The US Commerce Department granted Huawei a license to buy US goods up to 19th August to maintain existing telecoms networks to provide software updates to Huawei’s smartphones, a move intended to allow time for Huawei to make other arrangements.
Federal Reserve members commented the US economy was more stable than most had thought, despite the trade war. Reducing expectations of a near-term rate cut.
Minutes of the previous FOMC meeting will be released tomorrow at 6am.
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