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XE Morning Update - NZ

The NZDUSD opens lower at 0.6582 this morning.

Financial markets were relatively subdued overnight with a series of tweets from US President Donald Trump dominating the headlines.

Trump tweeted that Europe were deliberately devaluing the Euro to gain a competitive advantage. This is clearly untrue but suggests that Europe will be next in Trumps sights for Tariffs which will only weigh on global growth further. The irony is that the US have used a cheap currency to help fund their deficits over the years and it looks like they will revert back to that mode in the years ahead.

Next up were his comments about the US Federal Reserve who he described as having “no clue". Trump wants the Fed to slash interest rates to boost the economy. The Fed review rates next week and will most likely indicate interest rate cuts are on the way. Ironically the rate cuts will be needed to offset the effects of Trumps Tariffs which are a drag on growth.

In the markets the NZD and AUD drifted lower against most of their major trading partner currencies. The NZ Dollar lost more ground than the Aussie which has seen the NZDAUD drop back into the mid-0.9400 range. There was talk late yesterday that higher taxes could be on the way for those in the top bracket in NZ which would not be good for the growth outlook.

The Aussie dollar got a boost from sharply higher business confidence and a surprise setting of the Chinese currency which came in stronger than expected.

Today we get updates on NZ Migration although this data series has become less relevant as Stats NZ move to a new basis for working it out. We also get updated card spending data from NZ.

In Australia the latest consumer confidence data will be released and we expect this to be better. Looking at the latest housing sales data from Corelogic there is a strong pick up in sales underway and prices look to be lifting as well. There is still a back log of supply to be worked through but it looks like things are finally improving in the Aussie housing market.

Global equity markets were generally higher on the day - Dow -0.0%, S&P 500 -0.0%, FTSE +0.3%, DAX +0.9%, CAC +0.4%, Nikkei 0.3%, Shanghai +2.6%.

Gold prices fell 0.1% to USD$1,327 an ounce. WTI Crude Oil prices were flat at US$53.33 per barrel.

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