Global Economic Slowdown & Trade Disagreements Weigh Heavily on the AUD & NZD

Xe Corporate APAC

June 16, 2019 3 min read

The AUDUSD and NZDUSD both open sharply lower this morning. The AUD opens at 0.6874 and the NZD opens at 0.6499.

The USD rose across the board, driving the AUDUSD and NZDUSD down in the process, after encouraging US retail sales helped to alleviate fears the US economy is slowing rapidly.

Robust US retail sales in May suggested a pickup in consumer spending and helped, at the margins, to reduce the need for an immediate US Fed rate cut at its interest rate meeting held later this week. However, the markets still expect the Fed will lower rates by 0.25% on 1st August (local time), followed by another cut before the end of 2019.

China-US trade tensions appear to be weighing on the Chinese economy, with industrial output growth unexpectedly slowing to more than a 17-year low, amid slowing investment. The Chinese monetary officials are likely to be feeling the need to offer additional economic stimulus.

The Aussie and Kiwi are both suffering from the fallout from the global economic slowdown and trade disagreements, the Aussie more than most as it is also being weighed down by domestic property and employment market issues. The financial markets have largely priced in another 0.25% cut by the RBA on 6th August, one day before an expected rate cut of 0.25% by the RBNZ on 7th August, as global central banks appear to be locked in a race to the bottom!

The GBP fell further yet again after polls indicated Brexiteer Boris Johnson is moving closer to becoming the next UK Prime Minister. The markets are concerned Boris Johnson will lead the UK towards a no-deal Brexit.

Global equity markets were generally lower on the day - Dow -0.1%, S&P 500 -0.2%, FTSE -0.3%, DAX -0.6%, CAC -0.2%, Nikkei +0.4%, Shanghai -1.0%.

Gold prices fell by 0.3% to USD$1,342 an ounce. WTI Crude Oil prices gained 0.9% to US$51.57 per barrel after attacks on two oil tankers in the Gulf of Oman raised concerns about potential supply disruptions.

Upcoming Data Releases

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

Mid-Market Rates

AUDUSD0.6874-0.6%NZDUSD0.6499-1.1%AUDEUR0.61300.0%NZDEUR0.5792-0.6%AUDGBP0.54650.2%NZDGBP0.5165-0.3%AUDJPY74.58-0.5%NZDJPY70.46-1.0%AUDNZD1.05790.5%NZDAUD0.9452-0.5%GBPAUD1.8298-0.2%NZDCAD0.8710-0.5% GBPNZD1.93610.3%
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