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Kiwi unchanged despite Brexit drama

NZD - New Zealand Dollar

The New Zealand dollar remains relatively unchanged today as global markets remain in a holding pattern during the two key Brexit votes this morning. Opening this morning at 0.6401, with nothing on the economic calendar to digest, all eyes remain fixed on the evolving situation in the United Kingdom. As of writing, the ‘principles’ of the Withdrawal Agreement has passed parliament but the subsequent program motion vote was rejected, therefore putting Boris Johnson’s planned divorce deal implementation on ice. The market this morning is attempting to size up the implications but it looks clear an extension will have to happen with the chance for a second referendum and an election lifting.

Closer to home, Fonterra lifted its 2019/20 forecast milk price range by 30 cents to $6.55-$7.55 per kg which would inject an additional $450m into the New Zealand economy.

Moving into Wednesday, the Kiwi enjoys another quiet day on the domestic economic calendar with all eyes remaining in the United Kingdom grappling with the implications of the vote and what it could mean for Brexit.

Key Movers

Global financial markets have been in a holding pattern ahead of two key votes this morning. At 9:00 AM, The UK parliament voted in favour of the principles in Boris Johnson's withdrawal agreement. Following this vote however, Parliament rejected Boris Johnson's planned implementation of the withdrawal agreement before October 31st. Nevertheless, Boris Johnson has threatened to abandon the divorce deal altogether and reiterated his stance of leaving the European Union on October 31st with or without a deal.

Even with these two crucial votes progressing the Brexit narrative substantially there is still the thorny issues of what amendments will be added tomorrow if both votes were to pass. In one instance, there is a proposal for an amendment to seek an extension of the transition period out until 2022 to give the government time to broker a trade deal with the EU. In another proposal, there is a stipulation a second referendum must be called. All in all, Brexit still has a lot of ground to cover from here. The pound fell through 1.29 to currently trade at 1.2868 against the Greenback.

Across the Atlantic, Canada re-elected its Prime Minister Justin Trudeau in an election which saw him shed 15 seats and a majority government. Nevertheless, the Prime Minister holds onto power through a minority government which will shift his policies further to the left. The market reacted little to the news however with the Canadian Dollar unchanged.

Expected Ranges

NZD/AUD: 0.9312 - 0.9373 ▲

NZD/CAD: 0.8352 - 0.8419 ▲

NZD/EUR: 0.5724 - 0.5786 ▲

GBP/NZD: 1.971 - 2.045 ▲

NZD/USD: 0.6372 - 0.6433 ▲