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Kiwi flightless as US-China trade war escalates

NZD - New Zealand Dollar

The NZD fell through trade on Monday, opening at 0.6565 against the USD this morning. Falling from an intraday high of 0.6956, the NZD was largely affected due to China retaliating by increasing tariffs on $60 billion worth of US imports by up to 25%. This plunged the markets into a risk-off mode overnight, where investors flocked to FX safe-havens such as the Japanese Yen and Swiss France.

The release of Food Price Index data yesterday did not help the Kiwi, as the data came back lower than expected at -0.1%, compared to the previous month report of 0.5%. Although food price is fairly volatile, the change in price index has an influence on the quarterly NZ inflation data.

Key Movers

The focus has been on the continuing US-China trade war, as the US threatens to put a tariff on auto imports with a decision to be made by the 18th of May. EU Trade Commissioner Malmstrom expects President Trump to defer this deadline and has stated they are working on a list of €20 billion worth of goods as retaliatory tariffs.

The JPY and CHF spiked due to the trade war, as investors went into risk-off mode overnight, selling off riskier currencies. The Yen hit a one-week high of 0.009168 and the Franc of 0.9945 against the United States Dollar.

The UK Office for National Statistics is scheduled to release the monthly Average Earning Index report tomorrow evening. Expected to have a major impact on the Pound, the report shows a 3-month moving average compared to the previous year, and is a leading indicator of inflation.

Expected Ranges

NZD/AUD: 0.9440 - 0.9590 ▲

NZD/CAD: 0.8815 - 0.8875 ▼

NZD/EUR: 0.5810 - 0.5870 ▼

NZD/GBP: 0.5030 - 0.5100 ▼

NZD/USD: 0.6530 - 0.6600 ▼