Kiwi breaks 0.67 despite poor ANZ Business Survey
Tuesday 2 July, 2019
Daily Currency UpdateThe Kiwi continued its positive run into a ninth consecutive day as risk assets nudge higher. Opening this morning at 0.6701, the Kiwi gained 0.3% on Thursday despite a poor result in the ANZ business outlook survey which reported another significant drop in confidence. Reports of the removal of capital gains tax being taken off the agenda and the May rate cut have done little to improve sentiment with the RBNZ succinctly suggesting that there will be “ongoing subdued domestic growth” for New Zealand.
Nevertheless, the Kiwi was well bought ahead of the G20 meeting as reports that there may be a truce, if not a reconciliation, is on the cards for the world’s two largest economies. The optimism is fairly unfounded however with conflicting stories from a number of journalists muddying the consensus expected outcome to the talks. For example, Bloomberg speculates that the US and China are heading for an uneasy truce in order to return to the negotiating table. This would be complicated to achieve if what the Wall Street Journal is reporting is true. According to the WSJ, China is demanding a number of preconditions before coming to a trade war truce, including removing the ban on the sale of US technology to Huawei. Adding fuel to the fire, China will also demand that the US lifts all punitive tariffs and drop demands that China buy more US exports. Overall, the path to a truce seems opaque at best. Despite the mixed reports, the Kiwi inched it way higher on the broader optimism in the market.
Moving into Friday the Kiwi has little to digest domestically but will have plenty to consider as the G20 meeting kicks off in Osaka.
Key MoversThe big movers overnight came from the Asia Pacific region with both the Aussie and Kiwi taking out the best performing currencies for the day. While gains have been muted at best, the Aussie did manage to break through key resistance at 0.7 while the Kiwi enjoyed its ninth consecutive day of gains to break through 0.67.
Otherwise, it was a fairly muted session for other major currencies including the Greenback. The US Dollar had the opportunity to gain some traction ahead of the G20 meetings but was ultimately left where it started after US GDP came in as expected at 3.1%. There was some support for US equities however as reports of a positive outcome at the G20 meeting circulated. The S&P 500 gained 0.5% on the day as risk assets proved to be well bought ahead of the all important G20 meeting.
- NZD/AUD: 0.9514 - 0.9601 ▲
- NZD/CAD: 0.8736 - 0.8801 ▼
- NZD/EUR: 0.5874 - 0.5913 ▲
- GBP/NZD: 1.8869 - 1.8938 ▼
- NZD/USD: 0.6672 - 0.6732 ▲