XE Morning Update

The Kiwi opens at 0.6836

The Kiwi has managed to hold onto its gains after the RBNZ announcement on Wednesday. The market had priced in a circa 95% chance of a cut during 2019, so was caught very offside by the less than dovish comments. Market is now pricing in roughly a 50% chance of a cut, which still seems high, given how neutral and on hold the RBNZ is.

In Australia, all eyes turn to the RBA Assistant Governor Kent speaking at an XE hosted breakfast at 9:30 NZT. Special focus will be on the questions after his speech.

US Retail sales fell by the most since 2009, but the market is more focused on trade talks, which have officially started between the US and China. Rumour yesterday afternoon was the 1st March deadline of tariff increases could be extended another 60 days. Expect many headlines like this over the coming weeks. It will really be the trend in positive/ negative headlines that will be worth watching out for.

Out of the UK, Parliament defeated a vote reaffirming support for Mays plan to seek changes to her Brexit deal. 3 weeks ago Parliament had voted in favour of her trying to get changes out of the EU, but not anymore. Their Politicians seem very happy to say what they don’t want, little less inclined to say what they do. The EU’s patience must be running pretty thin, and a rejection of any potential Article 50 extension, would be a pretty good way to force a resolution one way or the other.

Chinese CPI out today at 2:30, which can be a big driver of the AUD.

Global equity markets are flat, Dow -0.06%, S&P 500 +0.03%, FTSE +0.09%, DAX -0.69%, CAC -0.23%, Nikkei -0.02%, Shanghai -0.05%.

Gold prices are flat at 1,314 an ounce. WTI Crude Oil prices slightly up, trading at $54.45 a barrel.

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