The Kiwi Dollar held on to its recent gains and begins the day at similar levels to yesterday as investors remained on the side lines ahead of the US mid-term election results. Earlier this morning the latest GDT Dairy Auction saw another fall in prices, down 2% from the previous auction.
An interesting day lies ahead with NZ employment data due out this morning and US election results expected to start coming through this afternoon NZ time.
Voting is underway in the 2018 US midterm elections. Projections are indicating that Democrats will regain majority of the House with 23 seats required to make the shift. Additionally, it is expected that the Senate will be retained by the Republicans. The gridlock in Congress will be viewed as a positive for markets and would be preferential to any major upsets.
Ahead of the US election results streaming in this afternoon, we have NZ labour market data this morning which is expected to show the unemployment rate dropping to 4.4% down from 4.5% previously. Barring any big surprises, market reaction to the data is expected to be contained, with the bigger event being tomorrow mornings RBNZ rate decision and accompanying statement.
The AUD remains flat with limited market reaction to yesterday’s RBA monetary policy statement. As expected, the OCR was left unchanged at 1.50%, with the Central Bank noting that the economy was performing well with GDP growing by 3.4% and the unemployment rate falling to 5% over the past year. Despite the more upbeat projections, policy is expected to remain on hold for some time yet, with the Bank saying progress in returning inflation to its target is “likely to be gradual”.
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