USD Recovers Ground Following News Trump Has Called off Tariffs on Mexico - APAC Update

Xe Corporate APAC

June 10, 2019 — 3 min read

The AUDUSD opens lower at 0.6959 and the NZDUSD opens lower at 0.6609 this morning.

The US Dollar is broadly stronger against most of its trading partners including the AUD and NZD.

The AUD pressured yesterday after data showed a sharp drop in imports by China. Imports plunged 8.5% year-on-year, compared with a drop of 3.5% forecast.

The NZD is down a touch further after the ANZ Bank economists called on the Reserve Bank of New Zealand to press on with interest rate cuts rather than wait for a crisis, saying the economy needed more stimulus. They also noted the RBNZ had expected the economy to have improved by now but there is little evidence of that.

US Update

The US Dollar has made solid gains since the weekend’s news that US President Donald Trump will indefinitely postpone tariffs on Mexico after they agreed to extra border security.

The news is seen as a boost to the US economic outlook and makes rate cuts by the Federal Reserve, at the margins, slightly less likely. US 10 year interest rates have moved back up nearly 10 basis points on the news.

UK & Europe

In Europe the economic data was again disappointing and there was talk over the weekend that rate cuts were discussed at last week’s European Central Bank meeting.

In the UK the economic data was also weak with the ongoing Brexit saga weighing on the outlook. Ten candidates have put their name in the hat to be selected as the next Prime Minister. The leading candidate Boris Johnson has said he would cut taxes and refuse to pay the Brexit divorce bill of EUR 50 Billion. This should prove popular with voters but less so with the EU.

Global equity markets were higher on the day - Dow +0.3%, S&P 500 +0.5%, FTSE +0.6%, DAX +0.0%, CAC +0.4%, Nikkei 1.2%, Shanghai +0.9%.

Gold prices dropped 0.9% to USD$1,328 an ounce. WTI Crude Oil prices fell 1.2% to US$53.34 per barrel.

Upcoming Data Releases

On the domestic data calendar front we get updates on NZ manufacturing this morning followed by Australian Business Confidence at 11.30am AEST. This is the first reading after the Coalition Government won the Election and we would expect a more positive tone to the business outlook.

NZ: Manufacturing Sales (Q/Q) - 8:45am AEST / 10:45am NZST
AU: NAB Business Confidence - 11:30am AEST / 1:30pm NZST

Mid-Market Rates

AUDUSD0.6959-0.7%NZDUSD0.6609-0.8%AUDEUR0.6152-0.6%NZDEUR0.5839-0.7%AUDGBP0.5486-0.3%NZDGBP0.5207-0.4%AUDJPY76.010.4%NZDJPY71.680.6%AUDNZD1.05330.2%NZDAUD0.9495-0.1%GBPAUD1.82280.3%NZDCAD0.8770-0.5% GBPNZD1.92050.4%
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