XE Morning Update

The NZDUSD opens at 0.6294 (mid-rate) this morning.

The NZD is the strongest performing of the G10 currencies on what appears to be profit taking ahead of tomorrow’s RBNZ monetary policy statement.

After surprising the market with a 50bp cut at their previous meeting on Aug 7th the RBNZ are expected to keep rates unchanged at tomorrow afternoon’s meeting.

The only economic data of note overnight, led to a sell-off in the euro after HIS Markit data showed Flash Euro area PMI data for September came in much weaker than expected with the composite output index crashing to a 6-year low of 50.4 in September following a 51.9 reading in August. Economists had forecast the index to edge up to 52.0. The Purchasing Managers' Index for services also disappointed slipping to 52.0 from 53.5 in August. The expected reading was 53.0.

Adding to the downward pressure on the EUR outgoing European Central Bank President Mario Draghi while addressing the European Parliament in Brussels has admitted that it is unlikely that the euro-zone economy will rebound in the near term. "Looking ahead, recent data and forward-looking indicators - such as new export orders in manufacturing - do not show convincing signs of a rebound in growth in the near future and the balance of risks to the growth outlook remains tilted to the downside," Mr Draghi said.

An absence of economic data during our trading day should see the NZD consolidate ahead of tomorrow afternoon’s RBNZ MPS.

Global equity markets remain mixed, - Dow +0.18%, S&P 500 +0.10%, FTSE -0.26%, DAX -1.01%, CAC -1.05%, Nikkei Closed, Shanghai -0.98%.

Gold prices edged up 0.6% overnight currently trading at $1,525 an ounce. WTI Crude Oil prices have retraced Friday’s fall, currently up 0.8% at $58.28 a barrel.

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