HiFX Morning Update, October 18, 2017

HiFX Morning Update, October 18, 2017

The NZDUSD opens at 0.7169 (mid-rate) this morning.

The NZD is trading slightly higher against the majority of its rivals after yesterday’s inflation data came is ahead of expectations. The NZDUSD traded to a high of 0.7200 before a disappointing dairy auction led to a NZD sell-off.

Yesterday’s consumer price index (CPI) climbed 1.9% y/y with the September quarter increasing by 0.5%. Both results were higher than forecasts with economists predicting an increase of 1.8% and 0.4% respectively.

A tapering off of demand resulted in another negative result at this morning’s dairy auction. The new season auction results are now evenly balanced at 5 positive and 5 negative outcomes. The GDT price index fell 1% from the previous auction a fortnight ago to US$3,204 a tonne, volume also fell with 35,669 tonnes of product selling under the hammer, down from 37,990 tonnes at the previous auction.

Better-than-expected economic data releases out of the US has helped support the USD. Industrial production for the month of September increased by 0.3% (exp 0.2%) after falling by 0.7% in August, while both import and export prices increased more than forecast during the same month. US import prices rose 0.7% following a 0.6% increase in August, while export prices climbed by 0.8% in September following an upwardly revised 0.7% increase in august.

UK inflation for September increased to 3%, up from 2.9% in August and in line with expectations, but the GBP failed to take advantage of the data after new deputy Bank of England governor Sir Dave Ramsden said he was not part of the majority of policymakers who favoured a rate hike.

Global equity markets remain mixed - Dow +0.07%, S&P 500 -0.06%, FTSE -0.14%, DAX -0.07%, CAC -0.03%, Nikkei +0.38, Shanghai -0.19%.

Gold prices are down 1.2% trading at $1,285 an ounce. WTI Crude Oil prices have edged lower, down 0.7% overnight currently sitting at $51.55 a barrel.

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