HiFX morning Update, October 25, 2018

The NZDUSD opens at 0.6521 (mid-rate) this morning.

The Canadian dollar is the standout performer over the past 24 hours, rising sharply after the Bank of Canada raised its cash rate to 1.75% from 1.50%.

This morning’s hike is the fifth since July 2017 and had been widely expected after Canada finalised a new trade agreement with the US and Mexico. Investor confidence in the CAD increased further after the accompanying statement removed previous references to a gradual pace of tightening suggesting that the central bank may speed up the pace of future hikes.

The USD along with the JPY are benefitting from risk aversion with US equities markets continuing to sell-off. Disappointing earnings news from some large US corporates including AT&T and UPS overnight is adding to the negative sentiment.

Earlier this morning the US Commerce Department released a report showing new home sales fell sharply in the month of September. The data release showed sales plummeted 5.5% to an annual rate of 553k with August’s result downwardly revised to 625k from the previously reported 629k result.

Crude oil prices are rising despite EIA data showing crude inventories rose 6.3m-barrels, much more than the 3.7m-barrel increase expected. Looming US sanctions on oil exporter Iran along with a large fall in US gasoline stocks, which decreased by 4.8m-barrels last week are helping to support prices.

Overnight, tonight the ECB are expected to keep interest rates unchanged as the central bank continues to unwind its quantitative easing policy.

Global Equity markets are mixed, - Dow -0.97%, S&P 500 -1.34%, FTSE +0.25%, DAX -0.73%, CAC -0.29%, Nikkei +0.37%, Shanghai +0.33%.

Gold prices are marginally lower, down 0.3%trading at $1,229 an ounce. WTI Crude Oil prices are up 1.2%, trading at $67.400 a barrel.

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