China-US Trade Tensions Keep Local Currencies Under Pressure - APAC Update

. 2 min read

The AUDUSD opens lower at 0.6918 this morning. The NZDUSD opens lower at 0.6542.

Trade tensions between the US and China kept growth currencies such as the AUD and NZD under pressure. US President Donald Trump said he was “not yet ready” to make a deal with China and hinted the two economic giants are far from a trade agreement.

The yields on Australian 3-year Government bonds fell to a record low of 1.09% on Monday. The markets have priced an 84% probability the RBA will cut the Cash Rate by 0.25% to 1.25% at its meeting next Tuesday, with many expecting follow-up rate cuts later in 2019.

The yields on NZ 2-year Government bonds fell to a record low of 1.325% on Monday, as the markets continue to wager on another 0.25% rate cut by the RBNZ in the coming months. This is helping to keep a lid on the NZD.

There is no data released scheduled on the domestic calendar today.

Tomorrow will be more interesting with the RBNZ Financial Stability Report, two speeches from RBNZ Governor Adrian Orr, along with ANZ Business Confidence figures.

Over in Europe and the UK...

The EUR struggled to hold earlier gains as investor relief at the limited success for Eurosceptic parties in European parliamentary elections was offset by a decline in the share of seats held by the biggest blocs. The election results have dented the hopes of anti-immigration, anti-Brussels parties.

The GBP fell, as sentiment remain negative, ahead of Theresa May’s departure from the Prime Minister’s office amid continuing Brexit uncertainty.

Global equity markets were higher on the day - Dow +0.4%, S&P 500 +0.1%, FTSE +0.7%, DAX +0.5%, CAC +0.4, Nikkei +0.3%, Shanghai +1.4%.

Gold prices gained 0.1%% to USD$1,285 an ounce. WTI Crude Oil prices jumped 2.1% to US$59.17 per barrel.

AUDUSD 0.6918 -0.2% NZDUSD 0.6542 -0.2%
AUDEUR 0.6181 0.0% NZDEUR 0.5846 0.0%
AUDGBP 0.5457 0.2% NZDGBP 0.5160 0.3%
AUDJPY 75.76 0.0% NZDJPY 71.65 0.0%
AUDNZD 1.0570 -0.1% NZDAUD 0.9459 0.1%
GBPAUD 1.8325 -0.3% NZDCAD 0.8797 -0.1%
      GBPNZD 1.9380 -0.3%

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Australia Morning Update  |  New Zealand Morning Update