The Kiwi Dollar opens this morning slightly up from yesterday as global markets recovered on news that the U.S would delay further tariffs on a portion of Chinese goods until the end of the year. The announcement eased some of the recent risk off sentiment in markets with equity prices recovering, and the AUD and CNY in particular outperforming most currencies. The Japanese Yen and Swiss Franc lost ground as they both gave back recent safe-haven gains.
U.S Cools Trade War With China
Financial markets have rallied as trade tensions eased between the U.S and China with Washington announcing that it would delay the introduction of 10% tariffs on a range of Chinese goods sold in the U.S. President Trump told reporters that he postponed tariffs for the Christmas season “in case it had an impact on shopping” and the delay would “help a lot of people”. The surprise move now has markets trying to analyse what this means, whether Trump has now “blinked” and shown his hand on the negotiations, or whether he has one eye on the upcoming elections and wants financial markets to remain buoyant.
U.S Inflation Stronger Than Expected
While trade news and the ongoing protests in Hong Kong dominated news, there was some positive U.S data released overnight with inflation coming in above expectations. US CPI increased 0.3% in July on a seasonally adjusted basis after rising 0.1% in June. The US Bureau of Labor Statistics reported that over the last 12 months all items on the index increased 1.8% before seasonal adjustment, this was slightly above market forecasts of 1.7%. The next big data announcement in the U.S is retail sales for July, released tomorrow night NZ time.
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