The NZDUSD opens lower at 0.6609 this morning.
The US Dollar has made solid gains since the weekend’s news that US President Donald Trump will indefinitely postpone
tariffs on Mexico after they agreed to extra border security.
The news is seen as a boost to the US economic outlook and makes rate cuts by the Federal Reserve, at the margins,
slightly less likely. US 10 year interest rates have moved back up nearly 10 basis points on the news.
The US Dollar is broadly stronger against most of its trading partners including the NZD and AUD.
The NZD is down a touch further after the ANZ Bank economists called on the Reserve Bank of New Zealand to press on with
interest rate cuts rather than wait for a crisis, saying the economy needed more stimulus. They also noted the RBNZ had
expected the economy to have improved by now but there is little evidence of that.
In Europe the economic data was again disappointing and there was talk over the weekend that rate cuts were discussed at
last week’s European Central Bank meeting.
In the UK the economic data was also weak with the ongoing Brexit saga weighing on the outlook. Ten candidates have put
their name in the hat to be selected as the next Prime Minister. The leading candidate Boris Johnson has said he would
cut taxes and refuse to pay the Brexit divorce bill of EUR 50 Billion. This should prove popular with voters but less so
with the EU.
On the data calendar front we get updates on NZ manufacturing this morning followed by Australian Business confidence at
1.30pm. This is the first reading after the Coalition Government won the Election and we would expect a more positive
tone to the business outlook.
Global equity markets were higher on the day - Dow +0.3%, S 500 +0.5%, FTSE +0.6%, DAX +0.0%, CAC +0.4%, Nikkei 1.2%, Shanghai +0.9%.
Gold prices dropped 0.9% to USD$1,328 an ounce. WTI Crude Oil prices fell 1.2% to US$53.34 per barrel.
ends