The Kiwi Dollar starts the day at similar levels to yesterday as the market largely shrugged off news that the Trump administration were pushing ahead with further tariffs on $200b of Chinese imports. The tariff rate will initially be set at 10%, but increasing to 25% at the start of next year. China has announced they will retaliate with their own tariffs on $60b of US imports. The big question for markets now is whether there will be further escalation or any scope for negotiations to resume. President Trump has tweeted that “there will be great and fast economic retaliation against China if our farmers and/or industrial workers are targeted”. There is a remaining $267b worth of imports that Trump could target, which would then cover all US imports of Chinese goods.
The NZD, AUD, and CAD all performed relatively well overnight with a risk-on tone returning to the market. The Kiwi was able to remain firm despite Dairy Prices falling once again in the overnight GDT auction. Prices were down 1.3% in USD terms, or 1.75% in NZD terms. It is now eight consecutive auctions where prices have fallen, which has added up to a -19% fall over that time. The fall in NZD has been less harsh, at -10%, due to the declining Kiwi Dollar.
The NZD/AUD cross rate is lower this morning as the Aussie outperformed the Kiwi. The Aussie found some temporary support after the Reserve Bank of Australia said the next move in their interest rate is likely to be up, however this would not happen in the near term.
The next big announcement for the NZD is tomorrow’s Q2 GDP data, due at 10.45am.
© 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.