The Kiwi opens at 0.6507
The Kiwi threatened to get interesting overnight, before deciding against it and reverting back to where it started. We
are in a bit of a holding pattern, with the market looking for direction either way. This is not uncommon, but what is
worth remembering is that when rates finally break out, they can have a decent move.
We have Chinese Manufacturing PMI at 1:00 pm NZT. This is definitely something Australia watch’s closely. Given the
current back drop of political risk around the trade war though, what tends to happen is these data points lose a little
significance. We would argue this is the case here - on a slightly positive or close to forecast number of 49.9, you
might only get a small bounce in the AUD. However, if there is an especially poor number, this could make things very
interesting. The market would then be very quick to extrapolate this out, thinking the trade war is indeed hurting
China, and therefore they would be more willing to come to the negotiating table. This would ironically be risk
positive, and also good for the AUD. Not every day you get that kind of outcome going into a data release. However,
always take these thoughts with a grain of salt, as currency markets have a habit of surprising, but it will be
interesting to see play out.
It is a long weekend for New Zealand, with locals enjoying the sunny Queen’s Birthday weather, so no NZD settlements on
Monday, though we will still be able to settle payments out of Australia.
Global equity markets were mostly lower on the day - Dow -0.07%, S 500 +0.07%, FTSE +0.46%, DAX +0.54%, CAC +0.51, Nikkei -0.29%, Shanghai -0.31%.
Gold prices are up 0.9% to USD$1,279 an ounce. WTI Crude Oil prices slumped 3.9% to US$56.47 per barrel.
ends