The New Zealand Dollar lost ground yesterday as weaker than expected terms of trade data and a continued risk-off tone in the market weighed on the currency. Trading was fairly quiet due to the Labour Day holiday in the U.S, with the main mover being the British Pound which ran into selling pressure on renewed Brexit Concerns. Closer to home, the AUD held up pretty well despite weaker than expected retail sales numbers, which has seen the NZD/AUD cross rate lose ground overnight. The main drivers for the NZD today will be the RBA monetary policy statement this afternoon, and the GDT dairy auctions tonight.
The RBA are expected to keep rates on hold this afternoon, however there will be much interest in the tone of the monetary policy statement. A continued neutral tone is expected, but the market will be interested to see if there is any response to the recent increase in mortgage rates from some of the local banks.
The British Pound ran into selling pressure overnight with new concerns about Brexit negotiations and weaker than expected UK manufacturing data weighing on the currency. Last week had seen the GBP rally after the European Union’s chief Brexit negotiator, Michel Barnier hinted that a Brexit breakthrough was imminent, however on Sunday during an interview with a German newspaper, Mr Barnier appeared to backtrack, saying that he was “strongly opposed” to the British government’s proposals on future trade ties after it leaves the EU.
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