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NZD Firmer as US-China Trade Deal Edges Closer

Published March 5, 2019

The Kiwi Dollar opens higher this morning as hopes grow that the US and China will finalize a trade agreement.

Trade Agreement Getting Closer

Global markets rallied amid growing optimism the US and China will reach a trade agreement as soon as this month. The Wall Street Journal reported that US President Donald Trump and Chinese President Xi Jinping might seal a formal trade deal around March 27, given the progress in talks between the two countries. The deal could see the US reverse its tariff hikes on at least $200b worth of Chinese imports, while China is believed to be offering to increase purchases of US goods.

RBA Rate Decision

The RBA will announce its decision on interest rates this afternoon at 4.30pm NZ time. Governor Lowe is expected to keep rates on hold at 1.50%, but the bigger question is what tone will accompany the announcement, and will Lowe continue with a relatively dovish stance. It is a big week for the Aussie, with Governor Lowe speaking tomorrow, followed by GDP, Retail Sales, and Trade Balance numbers over the next couple of days. The AUD starts the day lower after some underwhelming domestic data released yesterday, while the NZD/AUD cross rate remains at the top end of its trading range for the year.

No local data to speak of today, with direction for the NZD likely to be driven by the AUD. Tonight we have the latest GDT Dairy Auction, with markets expecting another rise in prices.