The NZDUSD opens at higher at 0.6581 this morning.
Tit-for-tat trade barriers have dominated the news wires the past 24 hours. US President Trump announced a 10% tariff on
USD$200 billion of Chinese imports. China responded with retaliatory tariffs on USD$60 billion in US goods. Barring a
deal, US tariffs will rise to 25% at the end of 2018, and tariffs on an additional USD$267 billion Chinese goods could
be announced. Love is certainly not in the air!
US companies and consumers are likely to rush to buy before the tariffs take affect – this additional spending could
boost growth for the next 3 months. However, spending would subsequently slowdown in the New Year as consumers balk at
higher prices and businesses stop ordering. This, in turn, would make it more complicated for the US Fed and their
interest rate decisions.
Closer to home, Fonterra’s Global Dairy Trade auction disappointed once again, with the price index falling 1.3% and
whole milk powder down 1.8%. The bright spot was volume of goods sold which increased 0.9%.
Prime Minister Jacinda Ardern’s GDP comments snafu resulted in a small, short-lived jump in the NZD yesterday. Ardern
said she had got a “hint” of the GDP numbers and was HiFX Morning Update– her office subsequently denied she had
advanced notice of the figures. The official GDP release will take place 10:45am Thursday.
The USD ended the day little changed, while the NZDUSD traded in the moderate range and ultimately made small gains
against the USD.
The NZDAUD fell modestly after the Reserve Bank of Australia said the next move in their interest rate is likely to up,
however this would not happen in the near-term.
The GBP pulled back from recent highs as the markets became more cautious about progress towards Brexit.
Westpac Consumer Sentiment will be released at 9am.
Global equity markets were higher on the day - Dow +0.9%, S 500 +0.7%, FTSE -0.0%, DAX +0.5%, CAC +0.3%, Nikkei +1.4%, Shanghai +1.8%.
Gold prices are fell 0.7% to USD$1,201 an ounce, while WTI Crude Oil prices jumped 1.6% to US$69.78 per barrel.