HiFX morning Update, August 24 2018

The NZDUSD opens at lower at 0.6636 this morning.

The NZDUSD fell yesterday after the AUD was punished as political turmoil took centre stage across the Tasman. Australian Prime Minister Malcolm Turnball faces another leadership challenge today, after several senior ministers resigned, which has sharply increased uncertainty and the AUD has suffered as a consequence, tainting the NZD in the process.

The NZDAUD surged to 3-week highs of 0.9164 as the NZD, understandably, outperformed the AUD.

The USD rallied overnight as the markets contemplated the impacts of fresh US tariffs against the pending outcome of their current trade talks with China. The big dollar also benefited after a US Federal Reserve official reaffirmed the central bank was on course to raise interest rates two more times this year.

At this stage, the markets do not appear to be overly concerned about the political future of President Trump following the plea deal of his former personal lawyer Michael Cohen and guilty verdict of former campaign manager Paul Manafort. President Trump himself predicted market melt-down if he was to be impeached and that “everyone would be very poor”.

The GBP slid lower overnight after the UK government stepped up its plans for a no-deal Brexit.

NZ Trade Balance hits the tapes at 10:45am, but political shenanigans across the ditch will be the primary market focus today.

The annual central bankers’ conference in Jackson Hole has begun. US Fed Chairman is due to speak Friday (US time).

Global equity markets were generally a little lower - Dow -0.2%, S&P 500 -0.1%, FTSE -0.2%, DAX -0.2%, CAC -0.0%, Nikkei +0.2%, Shanghai +0.4%.

Gold prices are trading at USD$1,175 an ounce WTI Crude Oil prices trading down form yesterday at $64.81 a barrel.

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