HiFX morning Update, November 15, 2018

The NZDUSD opens at 0.6788 (mid-rate) this morning.

This morning all eyes are focused on the UK, where Cabinet is still meeting behind closed doors as Theresa May attempts to gain their support for Britain’s divorce deal from the EU.

Overnight data from the US Labour Department showed consumer prices in the US for the month of October rose in line with expectations. Following a 0.1% increase in September the consumer price index increased by 0.3% in October, with core prices inching up by 0.2% in October following a 0.1% increase in September. The core price result was also in line with its forecast.

Global equity markets are again on the back foot sparked by concerns about a slowdown in economic growth following weak GDP data releases out of Japan and Germany over the past 24hrs.

Japan’s GDP for Q3 fell 0.3% (in line with expectations) following a 0.7% increase in Q2, on an annual basis GDP is down 1.2%, consensus was for the annual rate to fall to 1.0% following on from a 3.0% spike in Q2.

German GDP decreased by 0.2% in Q3 following on from a 0.5% increase in Q2. The result was below the forecast 0.1% fall and is the largest fall since Q1 2013.

The EUR continues to struggle and was not helped yesterday after the Italian government refused to amend its economic growth forecasts for 2019 despite calls from the European Commission for it to do so.The Lega and Five Star Movement coalition did however promise to sell some state-owned assets and have pledged that they won’t go over the 2.4% deficit, and believe they can achieve 1.5% economic growth in 2019. It remains to be seen how the Commission will react to the news but one action they could take is to impose an excessive deficit procedure (EDP) which amounts to financial penalties of up to 0.5% of GDP, approx. EUR 9 billion.

Global equity markets are marginally lower, - Dow -0.30%, S&P 500 -0.45%, FTSE -0.25%, DAX -0.52, CAC -0.65%, Nikkei +0.06%, Shanghai -0.85%.

Gold prices are unchanged trading at $1,203 an ounce. WTI Crude Oil prices are down a further 1% trading at $56.94 a barrel.

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