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NZ posts a stronger-than-expected CPI reading, pushing the Kiwi higher.

By OFX

The New Zealand Dollar maintained its gains in overnight trading as stronger-than-expected CPI data pushed the Kiwi higher. Opening this morning at 0.6585, the New Zealand Dollar looks well supporting moving into Wednesday.

The NZD initially rose 0.7% immediately after the Q3 CPI data showed that inflation was on the rise. Core measures of inflation were relatively steady, averaging 1.8% but non-tradeable inflation was up 0.2%. The CPI reading adds to the GDP posting from last month and will give the RBNZ food for thought. While a rate hike is still unlikely, it does add a positive bias to the RBNZ’s thinking. The Kiwi took the news positively but faded after the initial move higher, settling just below the 0.6590 mark.

Across the Tasman, the Aussie failed to gain any ground in currency markets which saw the Kiwi appreciate a significant 0.5% against it. Opening this morning at 0.9230, the New Zealand Dollar hit its’ highest level since June.

There will be no key data releases due out today with the Kiwi looking for direction from off-shore forces.

The Australian Dollar is slightly stronger this morning when valued against the Greenback. US equities notched their best day since March overnight, as strong earnings reports helped boost stocks on Wall Street following a sell-off earlier in the week.

On the data front yesterday the Reserve Bank of Australia (RBA) released its Monetary Policy Meeting Minutes which showed that policymakers are still concerned about tightening lending standards. The central bank maintained the cash rate at a record low of 1.5% and seems unlikely that such rate will be changed until at least 2020. Looking ahead this week and all eyes will be on Thursday’s jobless rate and NAB Quarterly Business Confidence.

From a technical perspective, the AUD/USD pair is currently trading at 0.7143. We continue to expect support to hold on moves approaching 0.7110 while now any upward push will likely meet resistance around 0.7180.

The Great British Pound edged marginally higher through trade on Tuesday following a stable unemployment print and uptick in wage growth. Pushing through 1.32 Sterling touched intraday highs at 1.3237 before uncertainty surrounding the outcome of the EU summit and Brexit end game weighed on upward momentum.

Negotiations remain locked in a stalemate over Irish border concerns while domestic political infighting could scuttle any agreement May and EU leaders agree and ensures a cloud of uncertainty continues to hang over Sterling’s outlook. Investors remain cautious of extending moves in either direction at this point as a defined path remains elusive.

Attentions today remain fixed on headline announcements with the positive spillover from expectations of a deal being reached at the end of the summit waning and weighing on extended upside moves through the immediate short term.

The US Dollar Currency Index (DXY) held steady overnight as equities surged higher to rebound strongly across the globe. Both the Dow Jones Industrial (Up 2.2%) and S&P 500 (Up 2.15%) enjoyed a rally on wall street on buoyant earning reports from blue chip companies.

Industrial output increased for the month of September producing a positive reading of 0.3% and above expectations of 0.1%. The mining sector was the main catalyst for the expansion rising 0.5% in output.

United States President Donald Trump on Fox Business remarked overnight that his biggest threat to his economic policies is the Federal Reserve and believes they are raising rates too fast.

The USD/JPY moved higher from open of 111.75 to an overnight high of 1.1230 as a gain in yield and improved risk sentiment paved the way through the 1.12 handle in its second attempt this week to gain momentum higher.

The EUR/USD touched a fresh weekly high in overnight trading, piercing the 1.1620 level. Once again however, the Euro failed to hold its gains and opens this morning at 1.1572. Mostly supported by US Dollar weakness, the Euro couldn’t find the momentum domestically to hold its gains as softer data releases and a mixed Brexit conspired to dampen Fiber.

Better market sentiment buoyed the Euro as the US Dollar weakened across the board. Well supported initially from the declines in its counterpart, Fiber turned to the German ZEW survey for some domestic motivation. Ultimately the survey showed a sharp deterioration in business sentiment in Germany which didn’t help the Euro’s fortunes. The Union also released its trade balance figures for August with showed a seasonally adjusted gain of €16.6B, a positive increase when compared to July’s reading but already widely expected.

Moving into Wednesday, the Euro looks to its September CPI reading as well as news from the EU economic summit for direction.

The Canadian Dollar once again opens stronger vs the worlds reserve currency and remains under the psychological 1.3000 handle. The USD/CAD pair moved within a tight 20-pip range during the Asian trading session between levels of 1.2979 and 1.2999, as the European markets opened the pair began to slide and despite weaker-than-expected Canadian Foreign Securities Purchases data the pair touched an eventual low of 1.2916 in the North America session.

A report released from the Statistics of Canada showed that foreign investment in Canadian securities slowed to $2.8 billion in August, the lowest monthly investment since the beginning of the year.

Todays see’s the release of Canadian Manufacturing Sales which is a leading indicator as to the state of economic health and is widely watched by markets.