The Kiwi dollar opens relatively flat today and will likely take further direction on trade negotiations as talks continue with the US and China. Later tonight US inflation numbers are released.
China Open to Partial Trade Deal
Trade optimism saw global stocks rise and the safe-haven Yen weaken. This was on comments from China stating they are still open to accepting a partial trade deal with the US, despite the recent blacklisting of Chinese technology firms and providing no additional tariffs are imposed by President Trump. In return, Beijing would offer non-core concessions like purchases of agricultural products such as soybeans.
Fed Split on Monetary Policy Path
Federal Reserve Chair Jerome Powell stated overnight that the central bank was “in a good place” despite obvious risks. The Fed will resume Treasury purchases in an effort to avoid a repeat of recent disorder in markets. Despite this, it was emphasized that although there will be a restart of the Fed expanding its balance sheet, it should not be viewed as a return to quantitative easing.
The FOMC minutes released this morning from their September meeting showed most policymakers supported the 25-basis point cut, citing their main concern was the lack of inflation and the risks associated with trade tensions. However, going forward they were divided with some policymakers calling for an additional rate cut, with others not seeing a further need for policy accommodation at this time.
Australian Consumer Confidence Hits 4-Year Low
Australian consumers turned pessimistic in October, with confidence touching a 4-year low as fears about the near-term economic outlook shattered their confidence. Both business sentiment and now consumer sentiment have dived this month despite the RBA cutting interest rates three times this year to a record low 0.75%, which would normally boost confidence. The AUD dipped on the announcement however has since pared losses.
© Copyright - EncoreFX, 2018.The information in this post is provided for general information purposes only and has been prepared without taking into account any person’s objectives, financial situation or needs and, accordingly, it does not constitute personalised financial advice under the Financial Advisers Act 2008, nor does it constitute advice of a legal, tax, accounting or other nature to any person. Before acquiring any financial services or products from EncoreFX, you should consider the appropriateness of the information having regard to your own objectives, financial situation or needs. We recommend that investors seek advice from their usual adviser before taking any action. EncoreFX (NZ) Ltd is a registered Financial Services Provider (FSP 461386), and is a licensed derivatives issuer under the Financial Markets Conduct Act 2013. EncoreFX (NZ) Ltd has lodged a Product Disclosure Statement (PDS) for each of our derivatives with the Registrar on 21-Dec-2016. A copy of each PDS is available from us or from the Registrar at www.business.govt.nz/disclose.