HiFX Morning Update, May 11 2018

The NZDUSD opens at 0.6966 (mid-rate) this morning.

The Kiwi is the worst performing of the G10 currencies in the past 24 hours after then new RBNZ Governor, Adrian Orr’s first Monetary Policy Statement and Press Conference, yesterday morning.

The RBNZ left the Official Cash Rate at 1.75% and stated that Monetary Policy will remain accommodative for a “considerable period”

U.S. Initial Claims for unemployment benefits were unchanged at a seasonally adjusted 211,000 for the week ending 5thMay. Expectation was for a rise to 218,000, but the 211k is still juxtaposed to the 209k recorded on April 21 2018, which was the lowest level since December 1969

U.S. Consumer Price Index increased by 0.2% in April on a seasonally adjusted basis after falling 0.1% in March, behind expectation for a 0.3% rise.

The U.S. Fed tries to keep Inflation close to its 2% target by influencing labour market conditions via interest rates, and services prices tend to be more sensitive to the labour market than goods prices. U.S. Service prices excluding energy rose 2.9% in the year through to April, however after Rents are removed they were only up 2.3%, which was little changed from March. This removes the risk that the Fed will increase the pace of interest rate hikes, as they don’t see an overheating market.

The Bank of England Monetary Policy Committee held rates at 0.5% by a 7-2 majority. The MPC voted unanimously to maintain the stock of corporate and government bond purchases. The Q1 slowdown in economic growth put the kibosh on the case for higher borrowing costs. The BOE expects the U.K. economy to grow by 1.4% in 2018 downgrading its previous expectation of 1.8% which was slightly above the market expectation.

Global equity markets are all higher: Dow +0.79%, S&P 500 +0.85%, FTSE +0.50%, DAX +0.62%, CAC +0.20%, Nikkei +0.39%, Shanghai +0.48%.

Gold prices are up 0.7% to $1,321 an ounce. WTI Crude Oil prices have continued to rally currently up 0.4% trading at $71.44 a barrel.

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