HiFX morning Update, March 29, 2019

The NZDUSD opens lower at 0.6782 this morning.

The USD rose overnight, nudging the NZDUSD down, despite data showing the USD economy slowed more than previously thought in Q4.

US Q4 GDP was lowered to 2.2%, from 2.6%, and keeps growth in 2018 below the Trump administration’s 3% annual target. This is helping to maintain an inverted US yield curve (short term rates being higher than longer term), which could indicate that a recession is likely within the next 2 years.

US-China trade talks continue with US officials arriving in China Thursday for a fresh round of discussions, which will be followed by a round in Washington next week. US officials said China has made proposals on a range of issues that go further than before, including on forced technology transfer. The Trump administration stated they are prepared to keep negotiating as long as it takes to ensure an acceptable deal is reached.

On the domestic front, yesterday’s ANZ business confidence numbers continued their slide in March – adding to fears the NZ economy is losing momentum and reinforcing the RBNZ’s just announced easing bias for interest rates.

Is more ‘shock & Orr’ in store for the markets today when RBNZ Governor Adrian Orr gives a speech on the future of NZ’s monetary policy? The just adopted rate cut bias from the RBNZ had the desired effect of lowering interest rates and the NZD. Will Orr now deliver a one-two punch during his speech at 9am?

Elsewhere, the Brexit circus continues with no end, or agreement, in sight. The GBPUSD sank to a 1-week low as UK Prime Minister May’s prospect of getting a deal through, and indeed for surviving as PM, sank further after the British parliament failed to agree on a way forward.

Global equity markets were mixed on the day - Dow +0.3%, S&P 500 +0.3%, FTSE +0.6%, DAX +0.1%, CAC -0.1%, Nikkei -1.6%, Shanghai -0.9%.

Gold prices plunged 1.5% to USD$1,291 an ounce as the USD rallied. WTI Crude Oil prices dipped 0.2% to US$59.23 per barrel.

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