XE Morning Update - May 29, 2019

NZDUSD 0.6542 0.0%
NZDEUR 0.5861 0.3%
NZDGBP 0.5170 0.2%
NZDJPY 71.58 -0.1%
NZDAUD 0.9451 -0.1%
NZDCAD 0.8832 0.4%
GBPNZD 1.9342 -0.2%

It was another benign night on the currency markets. The USD edged higher against a basket of currencies, but was flat relative to the NZD ahead of a busy day on the domestic data front (see below).

The USD and US Treasuries benefitted from ‘safe haven’ buying amid China-US trade tensions, to which there is no end in sight, and a strong rise in US consumer confidence.

The yield on the benchmark 10-year US Treasury fell to 2.26%, a level last seen in October 2017, and is now 9 basis points below the rate on the US 3-month bills. This inversion is often a sign of an impending recession.

The EUR weakened as the markets remain uneasy about the future of the EU as Eurosceptic and right-wing parties gained seats during the past weekend’s European parliamentary elections. In addition, Italian Deputy Prime Minister said the European Commission could fine Italy EUR 3 billion for breaking EU debt and deficit rules.

The GBP languished near 4-month lows against the USD as the jockeying and promises ramp up in the race for the UK Prime Ministership. Some candidates have announced they will be happy with a no-deal Brexit, should they get the top job.

It is busy day on the domestic data front:
9am - RBNZ Financial Stability Report,
11am - RBNZ Governor Adrian Orr press conference on the Stability Report,
1pm - ANZ Business Confidence figures,
1:10pm – Governor Orr testifies before Parliament on the Stability Report.

Global equity markets were mostly lower on the day - Dow -0.5%, S&P 500 -0.5%, FTSE -0.1%, DAX -0.4%, CAC -0.4, Nikkei +0.3%, Shanghai +0.6%.

Gold prices fell 0.5%% to USD$1,279 an ounce. WTI Crude Oil prices dipped 0.3% to US$58.98 per barrel.

Upcoming Data releases (NZST):
9:00am - RBNZ Financial Stability Report,
11:00am - RBNZ Governor Adrian Orr press conference on the Stability Report,
1:00pm - ANZ Business Confidence figures,
1:10pm - Governor Orr testifies before Parliament on the Stability Report.

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