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NZD Firmer as Trump Comments Weigh on USD, Today’s Focus on NZ Retail Sales Data

Published August 22, 2018

The Kiwi Dollar continued its recent recovery as comments from President Trump once again weighed on the U.S Dollar. Trump criticized Federal Reserve Chairman Jerome Powell for raising rates instead of being the “cheap-money Fed chairman” he wanted. He continued by suggesting that the Fed should do “what’s good for the Country”, and hold off on future rate hikes. Trump also repeated his view that China and Europe were manipulating their currencies. The NZD has now recovered 1.5 cents from its lows earlier in the month. Overnight the latest Global Dairy Trade (GDT) auction saw the overall price index fall by 3.6% from the previous auction a fortnight ago. The index has now fallen in five of the last six auctions. Currency markets largely ignored the results with the NZD maintaining its gains on a weaker USD.

NZ Retail Sales This Morning

Today sees the release of NZ retail sales data which has the potential to move the currency in either direction. Forecasts are for only a modest gain of 0.4% for the quarter following a 0.1% increase in Q1. However any signs of stronger consumption in the NZ economy could add support to the NZD as it may move the RBNZ to drop its recent cautious tone on interest rates. On the flip side, a weaker number would encourage the RBNZ to keep the OCR at record lows and possibly cut rates at some stage. Data is out at 10.45am this morning.

UK Reports Strong Surplus

The news that the UK budget balance posted the biggest surplus for July since 2000 saw the pound push higher against the majors. The Office for National Statistics report showed public sector net borrowing, excluding public sector banks, was in surplus by GBP 2.0b in July well above the expected GBP1.1b and 1.0b greater than the July 2017 surplus.

AUD steady after Leadership Challenge

The AUD was also higher on broad USD weakness, but has slightly under performed vs the NZD, seeing NZD/AUD move higher. The leadership challenge to PM Turnbull only had a passing impact on the AUD.