HiFX morning Update, October 16, 2018

NZDUSD 0.6548 0.4%
NZDEUR 0.5652 0.4%
NZDGBP 0.4975 0.9%
NZDJPY 73.22 0.1%
NZDAUD 0.9175 0.1%
NZDCAD 0.8506 0.0%
GBPNZD 2.0101 -0.9%

The NZDUSD opens at 0.6548 (mid-rate) this morning.

The British pound is the worst performing of the G10 currencies after EU President Donald Tusk announced a no-deal scenario in Brexit negotiations is "more likely than ever before" after both parties failed to reach an agreement on the key Northern Ireland boarder Issue. UK prime minister Theresa May has declared she “cannot agree to anything that threatens the integrity of our United Kingdom” and that the EU’s insistence on retaining the Northern Ireland backstop was unacceptable. May is due in Brussels tomorrow for a two-day summit where EU leaders will decide if enough progress has been achieved in the Brexit talks to hold a concluding summit in November.

The USD weakened overnight after the US Commerce Department reported retail sales growth for September came in well below economists’ forecasts. The report showed sales edged up by 0.1% in September equalling the August result and well short the forecast 0.5% increase. Core retail sales which excludes auto sales edged down by 0.1% following on from August’s downwardly revised 0.2% fall, confounding economists who had forecast a 0.3% rise.

Direction for the NZD will be dictated by this morning’s Q3 CPI report with economists forecasting a 0.7% increase on the quarter putting the annual pace of inflation at 1.7%. This result would be well ahead of the RBNZ’s now out-of-date1.4% forecast, with increasing oil prices, the weaker NZD along and Auckland's regional fuel tax the main drivers for the expected increase.

Global Equity markets are mixed, - Dow +0.28%, S&P 500 -0.03%, FTSE +0.48%, DAX +0.78%, CAC -0.02%, Nikkei -1.87%, Shanghai -1.49%.

Gold prices are have surged higher, up 2.3% overnight trading at $1,226 an ounce. WTI Crude Oil prices are moderately higher, up 0.6% trading at $71.21 a barrel.

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