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The pound opens as the worst performing currency following UK PM May’s heavily defeated exit deal, with the NZDGBP up 1% from yesterday’s open rate of .5194
UK PM May’s Brexit Deal Defeated Again
British PM Theresa May’s exit deal was defeated in parliament this morning for a second time and just 17 days before the planned departure date. MPs voted against May’s amended Brexit deal by 391- 242, citing the Brexit negotiations haven’t substantially changed from the deal May offered in January. Lawmakers are now due to vote tomorrow on whether Britain should exit the EU without a deal. It’s expected parliament will reject a “no-deal” Brexit and vote on Friday on whether government should request a delay to allow further negotiations.
Risk of Trade Talks Collapse
Top US trade negotiator Lighthizer says US-China trade talks may end in weeks, with the US government pushing for an end to practices and policies it argues have given Chinese firms unfair advantages. “If those issues are not resolved in favour of the United Sates, we won’t have a deal”. US and China have another call scheduled today with Lighthizer commenting “We are working more or less continuously”.
USD Falls on Soft US Inflation
US consumer price index increased 0.2% in February, the first gain in four months. US CPI in the 12 months to February rose 1.5%, missing expectations of 1.6% and was the smallest annual gain in close to 2-1/2 years. Soft inflation data supports the Federal Reserve’s patient approach to hiking interest rates. The Federal Reserve will be focusing on the core personal consumption expenditures (PCE) index, for monetary policy guidance which will be released on 19th March.
Australia Business Confidence Falls
The National Australia Bank’s index of business conditions dipped 3 points to +4 in February, with business confidence also falling 2 points to +2. NAB has recently changed its forecasts for interest rates, predicting weakness in housing and employment would lead to two rate cuts in late 2019. The RBA to date has remained optimistic on the outlook and with little desire to cut rates, markets are however pricing in a 25 point cut from the current 1.5% cash rate by September. The NZDAUD now tests the .97 levels.
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