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Trump authorises use of emergency crude stockpile

Published: Tue 17 Sep 2019 11:05 AM
NZ dollar weaker after Trump authorises use of emergency crude stockpile
By Rebecca Howard
Sept. 17 (BusinessDesk) - The New Zealand dollar fell against the US dollar after President Donald Trump authorised the use of the country's emergency crude stockpile after the weekend attack on Saudi Arabia’s major oil facilities.
The kiwi was trading at 63.42 US cents at 8am in Wellington versus 63.84 US cents at 5pm. The trade-weighted index was at 70.36 from 70.72.
The US dollar got a lift after Trump’s authorisation helped temper the surge in oil prices, which initially jumped around 20 percent in response to the drone strikes that impacted around 5 percent of global output.
While markets may have gotten some temporary respite, “the economic implications are numerous and add to an already fragile global economic backdrop,” said ANZ FX/rates strategist Sandeep Parekh.
“Heightened geopolitical tensions are likely to add to investor caution while real household spending could be dampened by higher fuel and transport prices than otherwise,” he added.
However, the main focus for the week remains on the US Federal Reserve and any comments from Fed chair Jerome Powell.
“While a 25bp cut in Fed Funds is fully expected, and appears guaranteed, the real interest will be in the associated rhetoric from Powell and its messaging regarding the forward policy profile," said Westpac Bank. Data from Bloomberg shows a 96.5 percent chance of a rate cut by the Fed.
New Zealand’s gross domestic product data Thursday will also be watched. The median in a Bloomberg poll predicts gross domestic product expanded 0.4 percent in the three months ended June 30, slowing from a 0.6 percent pace of growth in the March quarter, and below the Reserve Bank's forecast 0.5 percent.
Shorter term, investors will be watching for today’s minutes from the September monetary policy meeting of the Reserve Bank of Australia board. The RBA cut its cash rate on June 5 and July 3 by 25 basis points each time down to 1 percent. It then remained on hold for the next two meetings.
The New Zealand dollar was at 92.37 Australian cents from 92.82, at 51.06 British pence from 51.20, at 57.63 euro cents from 57.65, at 68.54 yen from 68.84 and at 4.4833 Chinese yuan from 4.5137.
(BusinessDesk)
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