Collinsonfx Daily Market Commentary

Markets continued to travel at record levels, despite some rumours of dispute between the US and China over 'phase one' of the trade agreement. The Chinese have demanded the cancellation of existing tariffs, while the US have apparently agreed to cancel future planned tariffs. The Fed Chair Powell confirmed threats to the US economy from weak overseas markets and low inflation, while the strong growth in the US economy, would prevent further rate cuts. The Dollar remains strong, with the EUR trading 1.1000, while the GBP held 1.2840. European industrial production contracted 1.7%, while German inflation held steady at 1.1% in contrast to the British 1.5%. US CPI continued to strengthen, rising to 1.8%, reflecting strong US economic growth.

The RBNZ confounded pundits and left cash rates at 1%, as markets had expected a further 0.25% cut. Recent local economic data releases have been improving and this pardoned the RBNZ Chair from further rate cuts. This allowed the NZD to spike back above 0.6400. The AUD was steady, trading 0.6830, unaffected by the RBNZ action. The trade exposed commodity currencies remain vulnerable to US/China trade threats and Central bank action and speculation.