The Kiwi Dollar opens the day lower as the US Dollar pushed higher across the board overnight. Concerns around the outlook for global economic growth has seen equity prices tumble once again, while oil prices also continued to slide, down by over 6%.
Commodity based currencies have unsurprisingly lost ground with the NZD, AUD, and CAD all coming under pressure. Also weighing on the NZD this morning was another fall in Global Dairy Prices, with the overall index down 3.5%. While the Kiwi is lower against the USD this morning, it has held up fairly well on most cross rates, notably the NZD/AUD which is up another 0.4%.
Yesterday’s Reserve Bank of Australia meeting minutes provided little in the way of surprises. The RBA expects the that the next move in interest rates will be up, but no near term adjustment is warranted at this stage. They noted surprise at the strength of recent GDP and unemployment data, but wages and inflation have been broadly in line with expectations.
The Pound was slightly weaker overnight as the market awaits further Brexit news. Bank of England Governor Mark Carney stated that the Pound’s volatility will remain as long as uncertainty continues over the United Kingdom’s exit from the European Union. In his address to parliament, he reiterated that a disorderly Brexit would see Britain suffer a major supply shock. The EU’s member states have emphasized discontent with the Brexit agreement that has been offered by the UK government. Brexit pressures will continue to swell, with the deal likely to be signed by the end of the week. However, market uncertainty still looms as the UK’s chief trade negotiator privately expressed frustrations with the Brexit withdrawal deal.
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