The Kiwi Dollar drifted lower for the third day in a row as the U.S Dollar remained steady despite a lower than expected CPI number released overnight. The main event today for the NZD will be this afternoons employment data out of Australia.
U.S CPI Misses Expectations
U.S inflation figures released overnight were lower than expected with the year on year number coming in at 1.8%, vs 1.9% market expectations. The number is also down on the previous reading of 2.0%. The data has boosted expectations of a Fed interest rate cut, which initially caused a sell off in the USD, before it recovered later in the day.
Trade War Concerns Keep USD Supported
The Greenback is maintaining a steady path as growing expectations of a Fed rate cut are being countered by continued trade war concerns. Overnight, White House Economic Advisor Larry Kudlow predicted the US economy will maintain 3% pace even without a China trade deal, and he remained hopeful that negotiations can be repaired after stalling last month. Meanwhile, US Commerce Secretary Wilbur Ross said that President Trump and Chinese President Xi Jinping may decide to reopen trade talks at the G20 summit later this month, however, both will not strike a definitive deal to end the trade war.
Focus on Australian Employment Data
The Australian Dollar moved lower overnight ahead this afternoon’s much anticipated labour market report. Market expectations are for an unemployment rate of 5.1%, which is well above the RBA’s latest estimate of 4.5%. Today’s number will be a key factor in RBA’s next move on interest rates.
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