By Dan Bell
The NZDUSD opens at 0.6781 (mid-rate) this morning.
After showing little reaction to yesterday morning’s softer than expected Q2 CPI report the NZD surged higher during the afternoon session after the RBNZ upwardly revised its core inflation estimate to a 7-year high of 1.7% in the year to June.
This morning’s Global Dairy Trade (GDT) auction suffered its fourth consecutive fall with the Index down a further 1.7% following on from its 5% fall a fortnight ago.
Rennet Casein along with butter were the biggest movers with prices falling 9.5% and 8.1% respectively. Whole Milk Powder (WMP) along with Skim Milk Powder (SMP) prices both edged higher up 1.5% and 0.8% respectively from the previous auction. Volumes were also down with a total of 25,454MT selling under the hammer.
An upbeat testimony from Federal Reserve Chairman Jerome Powell during his semi-annual testimony before Congress this morning has seen the USD outperform its rivals. Powell said the US economy continues to grow at a solid pace and that the latest data suggests economic growth in the second quarter was “considerably stronger” than in the first quarter. Powell referred to the latest inflation data as “encouraging” with the Fed confident that that inflation along with the job market will “remain strong”.
The GBP is the worst performing of the G10 currencies falling sharply ahead of another parliamentary vote on Theresa May’s Brexit plans. Although it has just been announced that the government narrowly won the vote on a trade bill, fears that the government will face further Brexit challenges is continuing to weigh on the GBP.
Global equity markets are broadly higher, – Dow +0.22%, S&P 500 +0.39%, FTSE +0.34%, DAX +0.80%, CAC +0.24%, Nikkei +0.44%, Shanghai -0.57%.
Gold prices are down 1% trading at a 12mth low of at $1,227 an ounce WTI Crude Oil prices have gained 0.6% overnight trading at $67.49 a barrel.
Current indicative rates:
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Dan Bell is the senior currency strategist at xe money transfer in Auckland. You can contact him here »