February 6, 2019 — 3 min read
The AUD opens well down at 0.7112 and the NZD opens down at 0.6832.
The AUD was the big mover in yesterday's trading, with the NZD being dragged down in sympathy. Royal Bank of Australia Governor Lowe gave a speech, focused on a shift in guidance. Previously, the RBA had interest rates on hold, with the next expected movement likely to be a hike.
Yesterday, this guidance was changed, and now Governor Lowe changed his viewpoint on risk to be “more balanced”, with the next move either being either a hike or even a cut. This announcement took the market surprise after the “Not Dovish” rate statement on Tuesday.
There are solid numbers out of the Global Dairy Trade auction in New Zealand, with prices up 6.7%. This was on the top of good volume of supply. However, these days it is barely worth a mention as the GDT has completely fallen off the markets radar, and there is little follow through to the Kiwi.
The Brexit ping pong continues, with May advocating for a time limit on the Irish Backstop. The EU comes back that the backstop is not negotiable.
May then promises Parliament that she will get concessions out of the EU. The EU says the withdrawal agreement cannot be renegotiated now. May then says they need to discuss the backstop, and the back and forth continues.
According to Reuters, PM May does not really want an extension on the Brexit date. Parliament does not want to accept the current deal, and it seems no one really wants a no deal. Either EU negotiators or give, but if an extension only gives us a few more months of the above, the EU could be forgiven for turning it down and forcing an outcome.
Employment data out of NZ today at 10:45, with the market picking a 4.1% Unemployment rate. Although last quarter come in very low at 3.9%, there is the perception that that was a little too good to be true, and Unemployment could push higher The Fed’s Powell also speaks at 1:00pm today. UK Official Bank rate decision overnight, which is widely expected to stay on hold.
Global equity markets have had a quiet day yesterday, Dow +0.04%, S&P 500 -0.16%, FTSE -0.06%, DAX -0.38%, CAC -0.08%, Nikkei +0.14%, Shanghai 1.3%.
Gold prices are slightly off, down 0.4% trading at 1,313 an ounce.WTI Crude Oil prices have risen up 0.6% trading at $54.08 a barrel
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