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Pound Surges on EU Barnier Comments

Published September 11, 2018

The Kiwi opens at 2.5+ year lows against the pound, euro, US dollar and yen on EU Barnier comments overnight and as trade tensions continue.

Pound Surges on EU Barnier Brexit Deal Comments

The big mover overnight was the pound after comments from the European Union’s top negotiator, Michael Barnier said that a Brexit deal is “realistic and possible” and could be agreed within the next 6-8 weeks. Comments were welcomed by markets and the NZDGBP has fallen to 0.5005 (wholesale rates), which is a level not seen since the Brexit-vote in June 2016.

The UK also enjoyed the fastest growth in almost a year as GDP grew 0.6% in the three months to July, largely due to strong consumer spending with the World Cup and a surprisingly balmy summer.

China’s August Consumer Inflation and Producer Prices Beat Expectations

China’s consumer inflation rose to 2.3% in August y/y, the fastest pace in 6 months and topped expectations of 2.2% and up from last month’s 2.1%. The producer price index also came in above forecasts at 4.1% vs expectations of 4.0%, however eased on the previous month’s 4.6%.

Today: Locally we have NZ electronic card retail sales at 10.45am

Week Ahead:

Wednesday – The Federal Reserve issues its Beige Book, a compendium of anecdotes on the health of the economy

Thursday – Bank of England and the European Central Bank both have their rate announcements on Thursday, with markets widely expecting both the BOE and ECB to leave their policy unchanged. Markets will instead be watching for any further guidance from the ECB as they move towards quantitative tightening. Markets currently pricing in a 90% chance of an ECB rate hike in October 2019

Friday – US Inflation