HiFX Morning Update - July 19 2016

HiFX Morning Update - July 19 2016

The NZDUSD opens at 0.7110 (mid-rate) this morning.

The NZD dropped sharply yesterday morning after the second quarter inflation data fell short of both the Reserve Bank’s and other economists forecasts. The Q2 CPI rose 0.4% in the March quarter short of the RBNZ’s 0.6% forecast putting further pressure on the Reserve Bank to cut the official cash rate. As of this morning the market is now pricing in a 75% chance of a 0.25% rate cut on the 11th August (the next Reserve Bank monetary policy meeting).

In the absence of any notable economic data releases overnight most currencies traded relatively tight ranges with the NZDUSD gradually working its way back above 0.7100. The GBP has been the best performing currency over the past 24hrs after a report from the BOE Monetary Policy Committee member Martin Weale stated the BOE “should wait for firmer evidence before making any policy change”.

Again its relatively quiet on the data front with Australia’s Monetary Policy Meeting Minutes due to hit the tapes at 13:30 likely to be the key driver for the NZDAUD cross ahead of tonight’s GDT auction.

Global equity markets remain mixed - Dow +0.09%, S&P 500 +0.24%, FTSE +0.39%, DAX -0.04%, CAC -0.34%, Nikkei Closed, Shanghai -0.35%.

Gold prices have edged lower currently down 0.6% at $1,329 an ounce, WTI Crude Oil is down 1.3% currently trading at $45.33 a barrel.

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