The Kiwi fails to hold gains above .6700 as market optimism fades on US-China trade truce with nothing substantial coming out of the talks.
Weak PMI Readings Raise Concerns On Global Slowdown
The Caixin China General Manufacturing Purchasing Managers’ Index (PMI) dipped into contraction in June to 49.4 from 50.2 in May and highlighted a need for more economic stimulus. Factory activity also shrank across much of Europe and Asia in June. In the US, the Institute for Supply Management said its manufacturing index saw its lowest reading in nearly 3 years which resulted in 51.7 new orders, however beat forecasts of 51.0 but was below the previous months 52.1. The weakness in manufacturing readings is largely driven by an escalation in trade tensions between the US and China.
OPEC Extends Oil Supply Cut
OPEC has agreed to extend oil supply cuts by 9 months in an attempt to boost the price of crude amid a weakening global economy and soaring US production. This will likely add fury to Trump who is keen to avoid higher gasoline prices ahead of election. Crude prices rose 2.4% overnight.
Eyes on RBA Rate Announcement
The Reserve Bank of Australia’s rate announcement is due out at 4.30pm this afternoon with markets widely expecting a rate cut from the existing 1.25% to a record low 1%. Markets will then turn their focus to RBA Governor Lowe’s speech later this evening for an indication on the future rate path. The NZD has pushed higher against the AUD ahead of the announcement.
Locally we have the NZIER’s Quarterly Survey of Business Opinion Index at 10am followed by this evenings’ Global Dairy Trade Auction with a further fall in dairy prices expected.
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