XE Morning Update - June 19, 2019

NZDUSD 0.6526 0.5%
NZDEUR 0.5828 0.7%
NZDGBP 0.5195 0.3%
NZDJPY 70.75 0.3%
NZDAUD 0.9490 0.1%
NZDCAD 0.8732 0.2%
GBPNZD 1.9249 -0.3%

The US and China said their Presidents will meet next week to reignite trade negotiations, sparking a rally in ‘risk assets’ such as the NZD and equity markets – US equity indices are approaching all-time highs.

Presidents’ Xi & Trump will hold an extended meeting at the G20 summit on 28-29 June in Osaka, with their respective teams beginning discussions prior to this. Trade talks fell apart in May after the US accused China of reneging on provisions of a tentative trade agreement, while Beijing said the US had raised its demands.

Overnight, European Central Bank President Mario Draghi said the ECB was ready to add further stimulus if needed, including cutting interest rates and more asset purchases. The race to ‘zero’ is on, with central banks in NZ, Australia, Russia, India and Chile having all recently lowered interest rates – the Reserve Bank of Australia said yesterday that further rate cuts were more likely than not.

The US Federal Reserve completes its 2-day interest rate meeting tomorrow morning (NZ time). It is anticipated the Fed will continue to prime the markets for a rate cut, with markets expectations indicating their next meeting as being ‘live’.

In other interesting news, it has been reported the Trump administration explored demoting US Fed Chairman Jerome Powell in February. President Trump has been highly critical of the Fed for not cutting interest rates and accused them of holding back the US economy and equity markets – independence anyone?

The GBP remained near its lows after Brexit cheerleader Boris Johnson was confirmed as the front runner to become the UK’s next Prime Minister.

There is no data scheduled on the local data calendar today.

Global equity markets were mostly sharply higher on the day - Dow +1.4%, S&P 500 +1.1%, FTSE +1.2%, DAX +2.0%, CAC +2.2%, Nikkei -0.7%, Shanghai +0.1%.

Gold prices gained 0.3% to USD$1,347 an ounce. WTI Crude Oil prices leaped a massive 4.3% higher to US$54.03 per barrel on US-China trade deal hopes and continuing Mideast tensions.

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