HiFX Morning Update, April 19, 2018

The NZDUSD opens at 0.7321 (mid-rate) this morning.

All eyes this morning will be our Q1 inflation report due to hit the tapes at 10:45am. Markets are forecasting for inflation to rise 0.4% up from 0.1% in Q4. More importantly the annualised rate of inflation is expected to fall from 1.6% to 1.1% for the first quarter. Although the fall is likely to be largely due to changes to the tertiary education fees by the Labour Government, the RBNZ will not like to see inflation so close to the bottom end of its 1% to 3% target.

The GBP underperformed with the Office for National Statistics reporting inflation in the UK slowed to a one year-low in March. Inflation which had been forecast to remain unchanged at 2.7% pulled back to 2.5% its lowest level since March 2017. Core inflation which excludes food, energy, alcohol and tobacco also slowed to 2.3% down from 2.4% in February.

As widely expected the Bank of Canada held its interest rate at 1.25%, but with the Governing Council announcing that it remained "cautious with respect to future policy adjustments," the CAD came under pressure. BOC governor Stephen Poloz went on to say that the bank will be guided by incoming data and that although higher interest rates will be warranted over time, “some monetary policy accommodation will still be needed to keep inflation on target."

Further direction for the NZD AUD cross rate will be driven by this afternoon’s Australian report. Forecasts are for the Australian economy to have added 20,300 new jobs during the March month with unemployment to tick down to 5.5% from 5.6%

Global equity markets push higher - Dow +0.05%, S&P 500 +0.05%, FTSE +1.26%, DAX +0.04%, CAC +0.50%, Nikkei +1.42%, Shanghai +0.80%.

ends

© Scoop Media