The NZD and AUD both struggled overnight as markets remained concerned about the increase in trade tensions between the USA and China. Trumps move to raise tariffs from 10% to 25% has made markets nervous. Overnight comments in the Chinese media indicate China will fight back with a range of measures including raising tariffs on USD 60 billion of products imported from the USA. China has also begun reducing its holdings of US treasury Bonds as a way of pressuring the US. The big question for currency markets is what will China do with it’s massive US Dollar holdings. China has over USD 3.0 Trillion of foreign currency reserves, mainly held in US Dollars. Any move by China to diversify away from the USD would send shock waves through the currency markets. China has historically limited the conversion of USD back into CNY and it has weakened the CNY 3.0% in the last week in the wake of Trump’s increased tariffs.
AUS General Election News
Looking at the markets the NZDUSD rate is drifting down towards the low 0.6500 area, last seen in October last year. The Aussie Dollar also remains under pressure feeling the brunt of the trade war concerns. The Australian General Election is being held tomorrow with the passing away of former Labour leader Bob Hawke potentially pushing Labour over the finish line in the close fought race. Commentators have speculated that a Labour win will see a similar result to NZ, with business confidence sliding but economic growth holding up well as higher Government spending supports growth.
Global equity are up across the board- Dow +0.79%, S&P 500 +0.97%, FTSE +0.78%, DAX +1.74%, CAC +1.37%, Nikkei -0.59%, Shanghai +0.58%.
Gold prices have dropped, down 0.6% trading at $1,287 an ounce. WTI Crude Oil prices continue to push higher, up 1.0% trading at $63.03 a barrel.
Our MarketWatch page is live, please click here to access.
Get in touch with us for more information or pricing.
Would you like daily international currency market news and insights delivered to directly to your inbox? Sign up to our country-specific updates below, and please browse the rest of our blog for more insights from XE offices around the globe.
The information, materials, accompanying literature and documentation available on our internet site is for information purposes only and is not intended as a solicitation for funds or a recommendation to trade. XE, its officers, employees and representatives accept no liability whatsoever for any loss or damages suffered through any act or omission taken as a result of reading or interpreting any of the above information.
While we take reasonable care to keep the information on the website accurate and up to date, there may be occasions when this is not possible. Case Studies and articles are not intended to predict future moves in exchange rates or constitute advice.
XE makes no representations, warranties, or assurances as to the accuracy or completeness of any information derived from third party sources. If you are in any doubt as to the suitability of any foreign exchange product that you are intending to purchase from XE, we recommend that you seek independent financial advice first.
For more information about XE, please click here: Regulatory Information