HiFX Morning Update, May 1 2018

The NZDUSD opens at 0.7039 (mid-rate) this morning.

The USD strengthened further overnight as the Core PCE index, the Federal Reserve’s preferred inflation measure, printed in line with economists’ forecasts. Consumer prices as measured by the personal consumption expenditures increased 2.0% y/y in March, its largest gain since February 2017, and follows on from a 1.7% rise in February 2018.

The US Commerce Department reported personal income rose by 0.3% in March just shy of the forecast 0.4% increase while personal spending increased by 0.4% for the same month, matching economists’ estimates.

Germany's retail sales unexpectedly declined in March, with Destatis reporting sales fell 0.6% m/m in March confounding economists who had expected sales to increase by 0.8%. The negative report was countered by Germany's consumer price inflation which rose 1.6% y/y in April, matching the March result. Economists had forecast the rate to drop to 1.5%.

The NZDAUD cross rate will be dictated by the tone of this afternoons RBA rate statement. The RBA which recently signalled to the market that the next move in interest rates was likely to be a hike, will have been disappointed by last week’s Q1 inflation report which fell short of expectations, and has dampened investor hopes of a “hawkish” statement.

Global equity markets are mixed- Dow -0.21%, S&P 500 -0.51%, FTSE +0.09%, DAX +0.25%, CAC +0.68%, Nikkei Closed, Shanghai Closed.

Gold prices are little changed, down 0.2%, trading at $1,318 an ounce. WTI Crude Oil prices are up 1% overnight currently trading at $68.65 a barrel.

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