XE Morning Update - July 3, 2019

NZDUSD 0.6668 -0.1%
NZDEUR 0.5907 -0.1%
NZDGBP 0.5293 0.3%
NZDJPY 71.99 -0.5%
NZDAUD 0.9542 -0.4%
NZDCAD 0.8744 -0.2%
GBPNZD 1.8893 -0.3%

The AUD is the best performing of the G10 currencies despite the RBA cutting its OCR by 25 basis points to a new record low of 1.0%.

In the accompanying statement Gov Lowe said that the bank will now wait "monitor developments in the labour market closely and adjust monetary policy if needed", with the word’s “if needed” leaving investors with the impression that further rate cuts may not be required. The Bank also reiterated that future changes in interest rates remain contingent upon the developments in the labour market because the they still see jobs growth as the key to reaching their inflation target.

Yesterday’s disappointing business confidence number is likely to put further pressure on the RBNZ to cut our OCR in August. The quarterly survey showed business confidence fell to its lowest level since March 2009, with a net 31% of businesses expecting a deterioration in general economic conditions over the coming months. As of this morning the market is pricing in 19 basis points of a 25 basis point cut at the August meeting.

In the only other economic data releases of note IHS Markit reported the UK construction sector contracted the most in more than a decade in June, while house price inflation slumped to a four-month low during the same month.

Global equity markets have edged higher, - Dow +0.10%, S&P 500 +0.08%, FTSE +0.82%, DAX +0.04%, CAC +0.16%, Nikkei +0.11%, Shanghai -0.03%.

Gold prices have retraced yesterday’s fall, up 1.6% trading at $1,407 an ounce. WTI Crude Oil prices are sharply lower, down 3.6% Trading at $56.93 a barrel.

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