XE Morning Update

The NZDUSD opens at 0.6881 (mid-rate) this morning.

Risk-linked currencies along with equity markets are strengthening after President Donald Trump announced he intends to postpone a planned increase in US tariffs on Chinese imports.

Yesterday morning President Trump announced that he was delaying the tariff increases on $200 billion worth of Chinese goods to 25% from 10% reflecting "substantial progress" in the ongoing trade talks between the US and China. Trump was pleased with the progress on "important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues," and plans to meet with Chinese President Xi Jinping to conclude an agreement assuming additional progress is made. Global equity markets are trading higher with the Shanghai index leading the way, up 5.6% at yesterday’s close.

The NZD is the strongest performing of the G10 currencies after yesterday’s Q4 retail sales result exceeded expectations. According to the Statistics New Zealand report retail sales spiked 1.7% in Q4 well ahead of the forecast 0.5% increase. Core sales which exclude autos increased by 2.0% (exp +0.8%) while year on year sales were up 3.5%. increased spending on pharmaceuticals, food services and duty-free goods were major contributors to the result.

Crude oil prices which are up circa 20% since the beginning of the year, have fallen sharply overnight after President Trump called for OPEC to “relax and take it easy” on boosting crude prices, trump tweeted “Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike - fragile!” Trump’s tweet is quite timely and comes on the eve of the annual International Petroleum Week, which opens in London today.

The data calendar doesn’t offer up much during our trading day with investors likely to look to tonight’s US consumer confidence report and Fed Chair Powell’s testimony before the Senate Banking Committee for guidance.

Global equity markets are moving higher, - Dow +0.69, S&P 500 +0.58, FTSE +0.07%, DAX +0.42%, CAC +0.31%, Nikkei +0.48%, Shanghai +5.6%.

Gold prices are unchanged trading at $1,327 an ounce. WTI Crude Oil prices have fallen sharply, down 3.4% trading at $55.77 a barrel.

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