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USD Strengthens on Trade Optimism

Published November 5, 2019

The New Zealand dollar failed to hold yesterday’s highs as the USD got a boost on improved global risk sentiment and optimism on a trade deal.

USD Rises on Trade Optimism

The USD rose and global stocks rallied overnight on signs that the US and China are nearing the end of a trade war. The US and China spoke on Friday of progress in trade talks and US Commerce Secretary Wilbur Ross said that licences for American firms to sell to Chinese telecommunications equipment made by Huawei Technologies will come soon. Ross also said there was no reason a deal could not be on track for signing this month.

Australian Retail Sales Disappoint

The AUD dipped on disappointing retail sales released in the month of September, with retail sales only rising 0.2% and missing forecasts of an expected 0.5% increase. Quarterly data fell by 0.1% in the three months to September and missed expectations of a 0.2% rise, hitting the weakest level since the early 1990s recession. The fall in retail sales show the Reserve Bank of Australia still has more work to do.

Today we have the RBA cash rate decision at 4.30pm, with expectations to hold as they already cut rates last month to a record low 0.75%.

US Factory Orders Hit 4-Month Low

New orders for US factory goods fell 0.6% in September, missing economist’s forecasts for a 0.5% slide. US durable goods orders fell 1.2% in September vs expectations of a 1.1% decline. The report comes amid thawing relations in US-China trade relations after Wilbur Ross said he was “quite optimistic” that the remaining obstacles in the first phase of US trade negotiations with China could be overcome soon.