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XE Morning Update - May 6, 2019

The NZDUSD opens at 0.6605 (mid-rate) this morning.

The NZD has gapped lower on the open this morning after Donald Trump announced on Twitter that tariffs on $200 billion of Chinese goods will increase to 25% on Friday and also threatened to impose 25% tariffs on an additional $325 billion of Chinese goods “shortly.” "The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!" he tweeted. The comments come as China as Vice Premier Liu prepares to travel Washington this week to resume negotiations.

Friday’s US employment report showed non-farm payroll employment surged up by 263k jobs in April with the unemployment rate falling to 3.6% its lowest level in 50 years. Economists had forecast jobs to increase by 181k and the unemployment rate to remain at 3.8%.

The US data was not all good with the Ism reporting its non-manufacturing index dropped to 55.5 in April after falling to 56.1 in March and is now at its lowest level since August 2017. Economists had forecast the index to edge up to 57.0.

The Euro-Zone received some welcome news with Eurostat reporting consumer price inflation accelerated more-than-expected in April reaching a five month high with energy prices along with service costs leading the charge. The index increased to 1.7% y/y following on from March’s 1.4% reading. Core inflation which excludes prices of energy, food, alcohol and tobacco, climbed to 1.2% from 0.8%.

Speculation that May and Corbyn could present on a new Brexit deal ahead of 23 May EU elections in an effort to save their parties after UK local election results saw the Tories relinquish around 1,300 seats (their worst result since 1990's) and Labour lose more than 60 has seen the British pound surge higher.

Tomorrow’s inflation expectations report is the last of the local data releases ahead of Wednesday’s RBNZ statement. As of this morning the forward market is pricing in 55% of a 25 basis point cut.

Global equity markets closed higher on Friday, - Dow +0.75%, S&P 500 +0.96%, FTSE +0.40%, DAX +0.55%, CAC +0.18%, Nikkei Closed, Shanghai +0.52%.

Gold prices edged higher on Friday, up 0.6% closing out the week at $1,278 an ounce. WTI Crude Oil prices clawed back some of Thursday’s fall on Friday, up 0.7% closing at $62.04 a barrel.


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