XE Morning Update November 28, 2019

NZDUSD 0.6421 0.0%
NZDEUR 0.5836 0.1%
NZDGBP 0.4975 -0.4%
NZDJPY 70.26 0.3%
NZDAUD 0.9474 0.1%
NZDCAD 0.8527 0.0%
GBPNZD 2.0097 0.4%

The Kiwi open at 0.6421

A fairly quiet night for the Kiwi, with RBNZ Gov Orr keeping to the status quo with his financial stability report, and no real surprises coming out.

The big highlight yesterday was a report out of Westpac Australia predicting a cut to a cash rate of 0.25%, and then QE from the RBA. The AUD initially sold off slightly before recovering. In what sounds suspiciously like someone talking their own book, I really do not see the case for this extreme easing. To me I think it is becoming increasingly clear, and more widely discussed, that at very low levels of interest rates, further cuts are neither stimulatory nor inflationary. The textbook model of cheaper money = go out and spend, does not seem to work when interest rates are so low. Instead of seeing low rates as an incentive to spend, people are starting to see low rates on their savings as an issue, and are therefore forced to actually save more to generate the same income levels in retirement. I think it is this relationship that will be increasingly focused on by Economists in the near future. People are finally starting to look at the likes of Japan and Europe as proof of the classical model no longer fitting.

Today we have NZ business confidence released at 1pm followed by Private Capital Expenditure out of Australia at 1:30.

Global equity markets are generally higher across the board, - Dow +0.14%, S&P 500 +0.38%, FTSE +0.36%, DAX +0.38%, CAC -0.05%, Nikkei +0.28%, Shanghai -0.13%.

Gold prices are flat, at $1,461 an ounce. WTI Crude Oil prices are off slightly down 0.5% to $57.96 a barrel.

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