The Kiwi dollar opens a touch higher against the USD this morning, currently sitting at 0.6514 on the wholesale rates.
Trade Deal Fades as Trump Signals Delay
Wall street fell to its worst day in nearly two months, down more than 1% today as President Trump signaled a trade deal with China could be delayed until after the 2020 election. In a separate report, Secretary Ross confirmed that new tariffs on Chinese goods would go into effect on December 15 as scheduled, unless substantial progress was made.
Trump has also threatened to impose duties of up to 100% on French imports worth USD2.4billion, following a US government investigation that found a new digital tax in France would harm US tech companies. Macron has said he will defend the interests of his country and of Europe. The EU commission have also said they will act as one and that the best place to settle disputes was at the World Trade Organization. Both the USD and EUR dipped over the trade spat.
RBA Takes Wait and See Approach
The Reserve Bank of Australia held interest rates steady at their latest rate announcement as widely expected, and left the door open for further rate cuts to the current record low 0.75%. RBA Governor Philip Lowe commented “The Board is prepared to ease monetary policy further if needed to support sustainable growth in the economy and that the board agreed that due to both global and domestic factors, it was reasonable to expect an extended period of low interest rates will be required in Australia”. Markets have now fully priced in a rate cut to 0.50% by April 2020, which could potentially be seen in February.
Focus now turns to Australia’s GDP release at 1.30pm with forecasts for an annual pick up to 1.7% from the previous decade low of 1.4%.
Dairy Prices Fall for the First Time in Three Months
The Global Dairy Trade auction overnight showed prices have slipped 0.5%, breaking three months of consecutive rises, with an average selling price of $3467 per tonne. Both whole milk powder and skim milk powder managed gains, however the price of butter was down 4.9%. The decline in prices won’t be helped by a rising NZD.
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