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Kiwi holds above 0.6500 on growing trade tensions

Published September 12, 2018

The NZDUSD opens at .6521 (wholesale rates) this morning as markets remain nervous on simmering trade tensions between the US and China.

China will now seek permission from the World Trade Organization next week to impose sanctions on the United States for Washington’s non-compliance with a ruling in a dispute over US dumping duties.

USD Boosted on Record Small Business Optimism and Job Openings

The USD 10-year treasury yield rose to 2.98% after the NFIB small business survey showed optimism hit a 45-year high in August. US job openings surged to a record high of 6.9 million in July and more Americans voluntarily quit their jobs, suggesting sustained market strength and confidence could see faster wage growth.

Markets have fully priced in a rate hike by the Federal Reserve when they next meet later this month and is 80% priced in for a December rate hike. The interest rate differentials continue to move unfavorably for the NZD, with the RBNZ holding interest rates at a record low of 1.75%, with the possibility of a rate cut.

UK Workers Finally Get A Pay Rise

Unemployment in the UK remained unchanged at a record 43-year low of 4% for the three months through to July, while wages surged more than expected at 2.9%. Both numbers were ahead of economist’s forecasts.

The Bank of England Governor Mark Carney agrees to stay on until the end of January 2020 to help ease the transition post Brexit, with the UK due to leave the EU on March 29th.