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NZD Softens on Reports of Trade Delay

Published November 21, 2019

The New Zealand dollar fell overnight as trade uncertainty escalates. Tensions could also intensify after the US senate passed a law intending to support the pro-democracy protests in Hong Kong.

US-China Trade Deal May Get Delayed to 2020

Global stocks and commodity currencies dipped on reports that US-China trade talks could hit a stalemate that may disrupt the bigger parts of the initial “phase one” trade deal. China is pushing for more extensive tariff rollbacks, with the US countering this with increased demands of their own. The next key date to watch is December 15, when tariffs on some USD156 billion of Chinese products are set to kick in. If talks are going well, the hikes will likely be suspended, if not the hikes will take effect and drag out talks into 2020, the US election year. Adding unease between US and China relations, China has condemned the US Senate, saying it should stop interfering in Hong Kong and Chinese affairs and stop the latest bills on Hong Kong from becoming law, following the Senate passing legislation at protecting human rights in Hong Kong.

Fed Minutes Signal Pause in Easing

The minutes released from the latest Fed monetary policy meeting showed voting members were divided on lowering the interest rate by 25 basis points to the target range of 1.50-1.75% by 8-2 votes. Following the meeting, Fed Chair Jerome Powell signaled the Fed was effectively on hold with interest rates as markets were widely expecting, and he went on to say that would only change if there was a “material” change in the US economic outlook. The Fed have cut interest rates three times this year and markets are now expecting rates to remain on hold through to mid-2020.

Local data today is the release of NZ credit card spending where we expect a small uptick from the previous months 4.8%