Powell Said The Fed Will Remain “Patient” On Further Interest Rate Hikes - APAC Update

. 2 min read

The AUDUSD opens lower at 0.7138, and the NZD USD opens lower at 0.6838 this morning.

US Update

The USD gained strength, pulling the NZDUSD lower, on safe-haven bids after US Trade Representative Robert Lighthizer said the country’s issues with China were “too serious” to be resolved by promises of more purchases of US goods by Beijing. Lighthizer said any deal must include a way to ensure commitments are met – certainly doesn’t look like any deal is imminent.

US Fed Chairman Jerome Powell continued his two-day testimony before the US Congress. He said the Fed will remain “patient” in deciding on further interest rate hikes. The US money markets have priced-out any chance of a rate hike this year and have priced-in an 80% probability of a rate cut by early 2020. Under such a scenario, the medium-term outlook for the USD is negative.

Global Update

The GBP rallied to its highest level in 7-months on expectations that a ‘no-deal’ Brexit was less likely and that the UK’s departure from the EU would be delayed.

The second US-North Korea nuclear summit commenced in Vietnam amid heightened tensions between nuclear powers India and Pakistan.

Oil prices surged higher after an unexpected plunge in US crude inventories and as Saudi Arabia appeared unfazed by pressure from President Trump to prevent oil prices from increasing.

Upcoming Data

ANZ Business Confidence figures hit the tapes at 1:00pm today. They have been consistently weak the past 12 months.

Global equity markets were mixed on the day - Dow -0.2%, S&P 500 -0.1%, FTSE -0.6%, DAX -0.5%, CAC -0.3%, Nikkei +0.5%, Shanghai +0.4%.

Gold prices slipped 0.5% to USD $1,318 an ounce, while WTI Crude Oil prices jumped 1.7% to US$57.27 per barrel.

Mid-market Rates

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AUDUSD 0.7138 -0.5% NZDUSD 0.6838 -0.7%
AUDEUR 0.6278 -0.5% NZDEUR 0.6013 -0.6%
AUDGBP 0.5366 -1.0% NZDGBP 0.5139 -1.1%
AUDJPY 79.26 -0.3% NZDJPY 75.91 -0.4%
AUDNZD 1.0440 0.2% NZDAUD 0.9581 -0.1%
GBPAUD 1.8636 1.0% NZDCAD 0.8993 -0.9%
      GBPNZD 1.9459 1.1%