The New Zealand Dollar opens flat against most major currencies this morning as markets await tomorrow’s European Central Bank meeting.
Eyes on ECB
Focus turns to tomorrow’s European Central Bank rate announcement with expectations the ECB will cut interest rates and point to further quantitative easing. The Euro rose overnight on reports that Germany is considering ramping up fiscal stimulus, an attempt to ward off a recession in Europe’s biggest economy. This should reduce pressure on the ECB to act aggressively to strengthen growth and provide support for the Euro.
China Producer Prices Contracts Most in 3 Years
China’s producer price inflation, an indicator of selling prices for domestic production fell 0.8% from a year earlier in August, resulting in the worst year-on-year contraction in more than 3 years and stoking fears of a global recession. China’s consumer price index rose 2.8% year-on-year to August, unchanged from July and beating expectations of a 2.6% increase, however is still below China’s annual target of 3%.
Australian Business Confidence Falls
The closely watched National Australia Bank (NAB) business confidence survey fell 3 points to +1 in August from July’s print of +4, the business conditions index also deteriorated falling 2 points to +1 vs +2 in the previous month. The NAB data signals rate cuts have failed to improve business sentiment and may increase pressure on the Reserve Bank of Australia for further easing. The AUD dipped on the announcement and has pared back losses overnight.
UK PM Boris Johnson Says Will Get a Deal and Leave the EU on 31 Oct
British Prime Minister Boris Johnson has promised to secure a better deal with the European Union at the October 17 summit in Brussels, following parliament voting against a snap election yesterday. PM Johnson however succeeded in suspending Parliament until October 14. The pound remains vulnerable to Brexit developments with markets seeing an increased risk of the UK crashing out of the EU next month.
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