The Kiwi Dollar trades lower this morning at the bottom end of its recent range losing around 0.5% overnight. The USD was generally stronger, while the Japanese Yen also benefitted from general risk aversion across markets. US Equities continued to fall amid concerns over the global growth outlook, tighter global monetary policy, and softer earnings reports from some large corporations.
The Canadian dollar is the standout performer of major currencies making ground after the Bank of Canada raised its cash rate to 1.75% overnight . The move was widely expected by markets, but the announcement was accompanied by a hawkish tone with the BoC saying the recent resolution of the NAFTA deal and easing concerns over household debt gave them more confidence in Canada’s economic outlook. The have also hinted at more frequent rises in the future.
The EUR starts our day weaker as markets were surprised by European PMI data overnight which showed confidence amongst the regions manufacturers dropped to the weakest level since 2016. Tonight we have the ECB rate decision, with no change expected with the bank in the final months of its quantitative easing policy. No hike in rates is expected until Summer 2019, but markets will be interested in President Draghi’s comments on the economic outlook.
Markets are expecting the New Zealand Trade Balance to widen to more than $5b this morning, as growth in imports continues to outweigh exports. Anything significantly outside these expectations has the potential to move the NZD, with all eyes on the announcement at 10.45 this morning.
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