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Trumps Tweets Stalls Kiwi’s Gains

Published September 14, 2018

The Kiwi’s gains stalled overnight as Trump denied pressure to make a trade with China and opens at similar levels we saw at yesterday’s open.
Trump took to twitter tweeting “We are under no pressure to make a deal with China”, they are under pressure to make a deal with us. Our markets are surging, theirs are collapsing. We will soon be taking Billions in Tariffs and making products at home. If we meet, we meet”.

US Inflation numbers miss expectations

The USD weakened overnight as US core consumer prices missed expectations in August which came in at 0.2% vs forecasts of 0.3%. The inflation report follows yesterdays’ producer prices falling in August for the first time in 1.5 years. Despite CPI and PPI reports both missing expectations, the Federal Reserve remains on path to raise interest rates when they next meet later this month. The NZDUSD initially hit .6589 (wholesale rate) on the US CPI release, with Trump’s tweet reversing the NZD back off these highs.

Australian Jobs Boosted

The Australian dollar got a lift yesterday on positive August jobs numbers coming in at 44k new jobs added, of which 33,700 were fulltime and against 15k expected. A 0.2% rise in the participation rate was also positive, unemployment however remained at 5.3%.

Central Banks

The European Central Bank kept rates unchanged as largely expected and stays on course to end bond purchases this year and raise interest rates by late 2019. ECB’s President Mario Draghi confirmed the ECB’s monthly bond purchases will fall from 30 billion to 15 billion euros from October and stop at the end of the year. Draghi focused on healthy domestic fundamentals, including rapid growth in employment and a rise in wages which are expected to boost inflation higher. Comments were seen as less dovish and saw the euro move higher against most major currencies.

The Bank of England kept rates on hold at .75% as expected and sited greater financial market concerns about Brexit. The BOE hiked rates last month, which was only the second time the BOE has raised interest rates in more than a decade.

The Turkish central bank raised its benchmark interest rate by 625 basis points to 24% which has helped support Emerging Market currencies.

Today markets will be watching China’s industrial production and retail sales which will be released this afternoon

Tonight will be all about the USD with focus on US retail sales, industrial production, and Michigan confidence.