Potential Brexit Deal Sees the Pound Surge Higher against Aussie and Kiwi Dollars

. 2 min read

The AUDUSD opens lower at 0.6754, and the NZDUSD opens lower at 0.6285 this morning.

The GBP was the big mover overnight. The GBPUSD surged to a 5-month high as the UK and European Union are reportedly closing in on a draft Brexit deal. The AUDGBP fell to 0.5282 - a level last seen over three years ago and the NZDGBP fell to 0.4915 – a level last seen 12 months ago.

The USD gained overnight, hurting the AUSUSD and the NZDUSD in the process, as optimism over any substantive trade deal between US and China continues to fade.

The AUDUSD fell to an overnight low of 0.6744 before clawing back some of its losses, while the NZDUSD fell to an overnight low of 0.6259 before bouncing back when the latest instalment of Fonterra’s Global Dairy Trade gained 0.5% from the previous auction. The key Whole Milk Powder price was unchanged.

The RBA released its 1st October monetary policy meeting minutes yesterday. The RBA cut the Cash Rate to 0.25% (to 0.75%) at this meeting, and the minutes signalled they are willing to lower rates even further if needed.

The International Monetary Fund (IMF) made a 5th straight cut to its 2019 global growth forecast. It cited a broad deceleration across the globe’s largest economies as trade tensions continue to hinder expansion.

Domestic market attention will be firmly placed upon NZ’s 10:45am Q3 CPI release. Expectations are for a +0.6% increase in the quarterly inflation rate, and these figures will assist the RBNZ in deciding whether to cut the Official Cash Rate again on 13th November. The interest rate markets have largely priced in a 0.25% rate cut for this meeting.

Global equity markets were higher on the day - Dow +1.1%, S&P 500 +1.2%, FTSE -0.0%, DAX +1.2%, CAC +1.1%, Nikkei +1.9%, Shanghai -0.6%.

Gold prices dropped 0.7% to USD$1,481 an ounce. WTI Crude Oil prices fell 0.9% to US$52.87 per barrel.

Mid-market Rates

AUDUSD 0.6754 -0.3% NZDUSD 0.6285 -0.2%
AUDEUR 0.6120 -10.4% NZDEUR 0.5696 -0.2%
AUDGBP 0.5280 -2.1% NZDGBP 0.4919 -1.8%
AUDJPY 73.53 -0.2% NZDJPY 68.40 0.2%
AUDNZD 1.0744 -0.1% NZDAUD 0.9306 0.1%
GBPAUD 1.8939 2.1% NZDCAD 0.8297 -0.4%
      GBPNZD 1.8939 2.1%

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