HiFX morning Update, October 3 2018

The NZDUSD opens at 0.6595 (mid-rate) this morning.

Risk appetite was dealt a blow late last night after Italian lawmaker and economic head of the ruling League party, Claudio Borghi said that the Italy would resolve its problems by returning to its own currency. His comments led to a fresh sell-off in Italian assets as well as the Euro and European equities. Italian government bonds plummeted for the second consecutive day with 10-year bonds yields spiking to 3.4%, its highest level since 2014.

Overnight the latest Global Dairy Trade (GDT) auction concluded with another fall in the price index. Overall the index fell 1.9% from the previous auction a fortnight ago with the butter index leading the way, down 5.9%. Whole milk and skim milk powder prices were also down 1.2% and 0.35 respectively.

UK construction growth surprised the market with the construction purchasing managers' index falling to 52.1 in September (its weakest level in 6-mths) from 52.9 in August. Economists had forecast the index to inch up to 53.1.

As expected the Reserve Bank of Australia maintained its cash rate at 1.50% with the RBA warning the market that rising household debt levels and falling housing prices are a source of uncertainty for the economy. The Australian dollar has since lost ground against all its major rivals with investors pricing out the probability of a rate hike by end 2019.

Equity markets are mixed, - Dow +0.52%, S&P 500 +0.12%, FTSE -0.28%, DAX -0.42%, CAC -0.71%, Nikkei +0.10%, Shanghai Closed.

Gold prices have pushed higher, up 1.2% trading at $1,202 an ounce. WTI Crude Oil prices are little changed trading at $74.88 a barrel.

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