The NZD opens lower today as markets retreat to safe-haven currencies amid concerns over rising US Treasury yields, global growth worries, and ongoing trade policy disputes between the US and China. Global stocks also retreated more than 2% overnight as investors remain cautious.
Sterling rallies as Brexit deal within reach
The pound brushed off manufacturing and GDP data misses overnight on positive Brexit sentiment. EU’s Brexit negotiator Barnier said the UK Brexit deal is 80-85% agreed and may be “within reach” by next week. Barnier tempered optimism as she stressed the EU’s insistence that the UK must accept possible checks on goods moving between its mainland and Northern Ireland, saying Brexit will trigger the need for customs, value-added tax, and compliance checks with EU standards. The NZDGBP dips below .4900 and volatility remains in place
US producer prices rebound
American producer prices rose 0.2% in September and in line with expectations. The producer price index rose 2.6% year-on-year in September slightly below expectations of 2.8%. Wholesale inventories for August came in significantly higher, jumping to a 5-year high.
Federal Reserve President Charles Evans said he sees a pause in lifting rates once they reach about 3% as long as inflation remains around 2% and the economy continues to do well.
Key data to watch will be tonight’s US inflation release which is expected to show an increase in consumer prices which will support the Federal Reserve’s path to continue with rate hikes.
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