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Xe Morning Update- How Lowe can you go?

The Kiwi opens up at 0.6424

The NZD has enjoyed a bit of a bounce on the back of solid retail sales data out yesterday. A fairly volatile data set, but it bet expectations by over 1%. The Kiwi is looking most constructive against the AUD, but is still yet to really break out of any recent ranges.

Out of the US, there are reports that there could be imminent news about a deal getting done. As you would have noticed, positive trade comments happen all the time before getting walked back, so the market is currently taking it with a slight grain of salt. If the phase one deal does get over the line though, expect risk on moves, and currencies like the NZD and AUD to benefit.

As promised the RBAs Governor gave a speech last night about alternative monetary policy, and its effects. The key takeaways were QE, or quantitative easing, would only be considered if the cash rate got down to 0.25%. Also the jury was still out on effects of negative rates overseas, and that would be extremely unlikely to happen in Australia. This is all a little general, but gives an insight to the long term thinking of the RBA. Being only at 0.75% at the moment, and with QE being considered at 0.25%, I would really think they want to keep their powder dry and not needlessly drop the cash rate to 0.5% with all the speculation and volatility that would bring at every future meeting.

The Pound is off a touch on the latest polling, with the Conservative lead narrowing, and Labour gaining. This highlights that we need to be aware of headline risk leading into the elections, as the closer we get the more polls are going to move things.

Highlight of the day today is Adrian Orr giving a press conference on financial stability. The banks will be watching closely to see hints on how much capital they may need to hold.

Global equity markets are generally higher across the board, - Dow +0.14%, S&P 500 +0.16%, FTSE +0.09%, DAX -0.08%, CAC +0.08%, Nikkei +0.35%, Shanghai +0.03%.

Gold prices have increased slightly, gaining 0.2% to $1,459 an ounce. WTI Crude Oil prices are good for a 0.9% gain to $58.23 a barrel.


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