The Australian Dollar is the best performing currency overnight following the RBA cutting interest rates to 1%, with the tone of the statement seen to be more positive than expected.
RBA Cuts Rates to Record Low 1%
The Reserve Bank of Australia backed up its recent June rate cut with another cut in yesterday’s rate decision to a new record low 1%, as largely priced in by markets. The RBA left the door open for additional rate cuts, if needed. However, comments were more upbeat than expected with the RBA siting the easing of monetary policy will support employment growth and provide greater confidence that inflation will be consistent with the medium-term target of 2% by 2020.
NZ Dairy Prices Fall
The Global Dairy Trade (GDT) price index fell 0.4% in the overnight dairy auctions with an average selling price of $3302 per tonne, declining for a fourth consecutive time as whole milk prices continued to decline. Volumes, however increased by 1.9% from the prior auction.
NZ Business Confidence Hits 10-year low
The New Zealand Institute of Economic Research’s (NZIER) quarterly survey of business confidence sunk to its lowest level since March 2009 in Q2, due to pessimism in the manufacturing sector. A net 34% of businesses surveyed expected general business conditions to deteriorate vs 29% in Q1. The fall in confidence supports the RBNZs recent view that further rate cuts may be needed to alleviate economic risks. The pessimistic views had little impact on the NZD.
Focus turns to tonight’s US ADP employment data with 140K new jobs expected, which comes ahead of the key US non-farm payrolls release on Friday night.
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