XE Morning Update

The NZDUSD opens at 0.6405 (mid-rate) this morning.

The USD spike higher before retracing the move in reaction to the release of the FOMC minutes from their July 31st meeting.

The minutes showed policymakers voted 8 to 2 in favour of cutting the target range for the federal funds rate by 25 basis points to 2.0%-0.25%.

The Fed cited concerns about the outlook for inflation, which continues to track below the central bank’s 2% target along with slowing global economic growth and the lack of progress in international trade negotiations as reasons behind the cut.

Described by members as a "mid-cycle adjustment" it is worth noting that 2 members were in favour of cutting the rate by 50 basis points while several members including Boston Fed President Eric Rosengren voted to leave rates unchanged.

"A number of participants suggested that the nature of many of the risks they judged to be weighing on the economy, and the absence of clarity regarding when those risks might be resolved, highlighted the need for policymakers to remain flexible and focused on the implications of incoming data for the outlook," the Fed said.

German Chancellor Angela Merkel has challenged Boris Johnson to come up with an alternative solution to the Irish boarder backstop. Merkel has given the UK leader 30 days to come up with an acceptable alternative to the backstop, which Johnson is insisting must be removed from any negotiations describing it as anti-democratic.

Global equity are broadly higher, - Dow +1.05%, S&P 500 +0.89%, FTSE +1.11%, DAX +1.30%, CAC +1.70%, Nikkei -0.28%, Shanghai +0.01%.

Gold prices are little changed trading at $1,503 an ounce. WTI Crude Oil prices marginally lower trading at $55.79 a barrel.

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