HiFX Morning Update, January 31 2018

HiFX Morning Update, January 31 2018

The NZDUSD opens higher at 0.7329 this morning.

The USD reversed gains from the prior day, as the markets await Thursday’s US Fed monetary policy announcement and Friday’s US non-farm payroll employment data. This pushed the NZDUSD back above 0.7300.

NZ’s December Trade Balance exceed expectations yesterday. Total exports of $5.6 bio set a December record, and were $1.1bio higher than in December 2016. Record export value of dairy products was a primary driver.

The GBP slipped to a 1-week low against the USD on renewed concerns about the impact of Brexit on the UK economy and on the slow progress of the exit talks with the EU.

US bond yields continued to move higher, with the 10-year bond yield (interest rates) hitting 2.73% - close to a 4-year high. Higher yields have generally been USD supportive, but this has not been the case over the last 2 months.

There is nothing scheduled on the NZ data calendar today. Main highlights will be Australian Q4 inflation figures at 1.30pm, followed by President Trump’s “State of the Union Address” at 3pm.

Global equity markets fell sharply on the day – Dow -1.5%, S&P500 -1.1%, FTSE -1.1%, DAX -1.0%, CAC -0.9%, Nikkei -1.4%, Shanghai -1.0%.

Gold prices fell 0.7% to USD$1,336 an ounce. Oil prices (WTI) plunged 1.8% to USD$64.35 per barrel.

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