XE Morning Update - April 12 2019

The NZD opens down at 0.6727

The Kiwi tested its recent lows overnight, with the 0.6700 level just managing to hold. For how much longer, is really the question though, and a break below there will have the Kiwi losing altitude quickly. The move lower was on the back of US strength, with US PPI coming in at a strong 0.6%, beating expectations of 0.3%. An increase in the Produce Price Index can bode well for future increases in the CPI, and therefore is closely watched. What has also helped, Unemployment claims came in lower again, and the 196k claims was the new lowest level since 1969.

All this really makes you wonder, with inflation circa 2%, GDP Growth equal highest since 2005, and where employment hasn’t been higher since the 60’s, why is the Fed so Dovish? If they even turn slightly neutral, that could be all the catalyst needed for the USD to come surging back.

In a “shock announcement” out of the UK, after saying they would not extend the Brexit deadline- Article 50, Article 50 has been extended another 6 months. (For now). This was met with general ambivalence from the market, but it does remove some near term risk.

On a data front, we have the Chinese Trade balance expected this afternoon, although the exact timing is uncertain. To me though the market is looking pretty poised for a move, and you don’t necessarily need much of a spark to kick things off.

Global equity markets were mixed on the day - Dow -0.17%, S&P 500 -0.12%, FTSE -0.05%, DAX +0.25%, CAC +0.66%, Nikkei 0.11%, Shanghai -1.6%.

Gold prices continue to slide, down another .3% to USD$1,294 an ounce. WTI Crude Oil prices are off 1.5% to US$63.59 per barrel.

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