HiFX morning Update, October 15, 2018

The NZDUSD opens at 0.6509 (mid-rate) this morning.

Compared with the volatility seen earlier in the week, currency markets were relatively subdued on Friday with most currency pairs trading tight ranges.

The University of Michigan’s preliminary consumer sentiment report for the month of October showed an unexpected decline in the index with the report showing the index edged down to 99.0 from September’s final reading of 100.1. Economists had expected the index to increase to 100.4.

Import prices in the US increased by 0.5% in September following on from an upwardly revised fall of 0.4% in September. Import prices had been expected to increase by 0.2% with August’s previously reported 0.6% fall.

The USD pushed higher late on Friday after Trump’s economic advisor Larry Kudlow hinted that Trump and Chinese President Xi Jinping are in talks about a possible meeting between the parties late in November. "There may be a meeting, but it has not been set in concrete as far as I know," Kudlow said. "They have lots to talk about, so we'll see."

This morning EU negotiator Michel Barnier has announced that “despite intense efforts, some key issues are still open” and that the urgent talks with his British counterpart, Dominic Raab have been put on hold. Mr Barnier confirmed that the Irish boarder is among some of the unsettled issues.

US equity markets which were sharply lower on the week, found support on Friday with strong Chinese trade data helping to ease concerns over slowing global growth. The Dow closed, up 1.15% while the S&P gained 1.4% late on Friday.

The key domestic driver for the NZD this week will be tomorrow morning’s quarterly inflation report with economists expecting Q3 CPI to increase by 0.7% following on from Q2’s 0.4% result.

Global equity markets closed out the week mixed, - Dow +1.15%, S&P 500 +1.42%, FTSE -0.16%, DAX -0.14%, CAC -0.20%, Nikkei +0.46%, Shanghai +0.91%.

Gold prices pushed higher on Friday, up 1.5% closing out the week at $1,217 an ounce. WTI Crude Oil prices edged higher on Friday, up 0.9% closing out the week at $71.45 a barrel.

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