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XE Morning Update

The NZDUSD opens at 0.6627 (mid-rate) this morning.

US Retail sales data out overnight showed solid gains in line with expectations. Most of the gains came in the food and beverage, health and personal care sectors as well as Gasoline stations. The likes of electronics, appliances and clothing were flat. It will be interesting to see how the consumer fares in 2020 with price rises outstripping earnings which will limit their purchasing power.

There has been some talk of another round of tax cuts from the Trump Administration but given the Democrats control the Congress it is extremely unlikely that any tax cuts would get passed. Also, the Trump Government deficit is already running above USD 1 Trillion for the year so the debt pile is growing fast. In the longer term this will become a big issue but for now markets are not overly concerned about the US Government's 23 Trillion debt burden.

In the markets there has been little reaction to the Trade deal that was announced yesterday. The US Dollar is slightly stronger against the Australian Dollar whereas the NZ Dollar has made gains against both the USD and the AUD. This puts the NZDAUD back above the 0.9600 level which offers importers very good value.

Today we get updates of Chinese GDP growth data which is expected to show the Chinese economy grew at 6.0% last year. Whilst the overall growth rate is slowly declining, their growth in Dollar terms is still more than double that of the USA.

Global equity markets were mixed overnight - Dow +0.57%, S&P 500 +0.56%, FTSE -0.43%, DAX -0.02%, CAC +0.11%, Nikkei +0.07%, Shanghai -0.52%.

Gold prices inched lower overnight currently at $1,551, while WTI Crude Oil is 1.47% higher trading at $58.66 a barrel.

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