HiFX morning Update, September 20 2018

The Kiwi opens up at 0.6616

Risk currencies have continued to fare well overnight. China’s Premier Li came out during the trading day yesterday with comments at the World Economic Forum that they should maintain basic principles of free trade. He also said they won’t devalue the currency to stimulate exports. This is seen as a de-escalation of tension. However one does wonder how much the ball is in China’s court to de-escalate…

In another sign of the times we live, UK CPI came in very strong at 2.7% y/y, compared to the 2.4% expected. However after only a small increase, the GBP got sold back, to close down about half a percent across the board. Brexit headlines are rife, but the sell-off came when Theresa May was reported to reject the improved Irish border offer. At some stage we would expect Brexit headline fatigue to set in, but at the moment the markets are still moving off it.

Today out of New Zealand at 10:45 a.m. we have the much talked about GDP figure. Officially expected to come in at 0.8%, the PM Jacinda Ardern earlier said she was “Pretty pleased” about the number. She later back tracked on that comment, but the market would have still factored it in to their expectations. The Kiwi probably won’t move round much if it comes in slightly positive, and we would expect some weakness on a flat 0.8% print.

Beyond that the only notable date overnight is the volatile UK Retail Sales figure at 20:30 tonight.

Global equity markets were higher on the day - Dow +0.65%, S&P 500 +0.14%, FTSE +0.42%, DAX +0.5%, CAC +0.56%, Nikkei +1.08%, Shanghai +1.14%.

Gold prices are up 0.6% to USD$1,208 an ounce, while WTI Crude Oil prices have continued higher, gaining 2% to US$71.16 per barrel.

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