The Kiwi Dollar opens the day firmer, with the USD weakening across the board as US-China trade tensions continue to dominate the headlines. The market is awaiting an announcement from President Trump, possibly today, on whether the U.S will go ahead with a fresh round of tariffs on $200b worth of Chinese goods. More than 1000 products would potentially be subject to a 10% border tax. If this is confirmed, then it is expected the Chinese would decline US Treasury Secretary Munchin’s invitation for fresh trade talks. China’s foreign ministry has said it would take “necessary steps” if the US did go ahead with its planned tariffs.
Short term direction for the NZD continues to be dictated by US-China trade developments. No local data in the calendar for today, with the next relevant release being the Global Dairy Trade auction tomorrow morning, where another fall in prices is expected. On Thursday we have NZ Q2 GDP numbers, with a recent reuters poll predicting a 0.7% rise, compared to 0.5% in Q1.
The British Pound tested a 7 week high overnight on improved market optimism that the UK will reach a satisfactory Brexit agreement. Reports are that talks are progressing well with both sides keen to finalize an agreement. Earlier, the IMF Managing Director had said that failure to get a deal would make the UK economy shrink.
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