HiFX Morning Update, August 17 2016

HiFX Morning Update, August 17 2016

NZDUSD 0.7272 0.9%
NZDEUR 0.6447 0.0%
NZDGBP 0.5576 -0.5%
NZDJPY 72.92 -0.2%
NZDAUD 0.9447 0.6%
NZDCAD 0.9348 0.4%

The NZDUSD opens at 0.7272 (mid-rate) this morning.

The latest GDT auction result has helped push the NZD higher against the majority of its major rivals. Fonterra's GDT Price Index rose 12.7 percent, with an average selling price of $2,731 per tonne, volumes also increased up 8.1% from the previous auction with a total of 37,766 tonnes sold. Key for New Zealand was the whole milk powder result which spiked 18.9% to $2,695 a tonne, from the previous auction.

The USD lost ground overnight after their Core CPI m/m delivered a flat result putting a dent in any hope that the Fed could raise rates at their September meeting. A report from San Francisco Fed President John Williams suggesting that central banks might have to raise inflation targets so as to give monetary policy more room for manoeuvre in changing economic outlook, also added to the fall. Williams went onto state "There is simply not enough room for central banks to cut interest rates in response to an economic downturn when both natural rates and inflation are very low."

The ZEW Indicator of Economic Sentiment in Germany rose to 0.5 in August from -6.8 (post Brexit) in July economists had expected the indicator to post a 2.1 result.

There was better news for the UK after their consumer price inflation rose 0.6% just ahead of its forecast 0.5%, in the year to July, reaching its highest level since November 2014.

The key driver for the NZD today will be our quarterly employment report due out at 10:45, economists are forecasting employment change of 0.6% with unemployment expected to fall from 5.7% to 5.3%.

Global equity markets have turned negative - Dow -0.35%, S&P 500 -0.45%, FTSE -0.68%, DAX -0.58%, CAC -0.83%, Nikkei -1.62%, Shanghai -0.49%.

Gold prices continue to edge higher up 0.6% overnight trading at $1,348 an ounce, WTI Crude Oil continues to rise up 2.2% overnight currently trading at $46.71 a barrel.

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