Collinson FX:October 1, 2019 - Business confidence drops NZD

by Collinson FX 2 Oct 2019 00:31 NZDT 2 October 2019

The NZ mens 470 bursts through a wave - Day 4, 2016 Olympic Regatta © Richard Gladwell / Sail-World.com

Markets rebounded strongly, to open the week, after US officials refuted the rumours of US/China Capital restrictions. White House official Peter Navarro dismissed the rumours, that swept the markets Friday, as ‘fake news’.

EU CPI was zero, confirmation that growth and inflation in the EU is dead, while Unemployment did show some signs of improvement, falling to 7.4%. The EUR fell below 1.0900, while the GBP traded 1.2280, after UK GDP beat expectations and remained positive. The British PM Johnson has refused to step down and committed to Brexit by 31st of October, Halloween. Brexit will be a huge boost to the British economy, assuming they do not have an intermediary, poor deal.

Local markets will keenly await todays RBA decision, which is expected to further stimulate the economy, with a further rate cut. The RBA will likely cite the dangers posed by the US/China trade threat and the associated growth problems. This will probably not impact the currency as expectations are high. The AUD trades 0.6740, while the NZD fell back to 0.6260, after another deplorable Business Confidence number. NZ Business Confidence slumped to another low, reflecting the business perception of current Government policy.

Markets await the RBA and developments surrounding the US/China trade war.

Jo Aleh and Polly Powrie (NZL) on their way to winning one of the 30 Olympic medals won by Mackay Boats - Day 6 - Weymouth 2012 - photo © Richard Gladwell

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Markets closed out the previous week lower, after news of capital investment changes in the US, may impact Chinese and US companies.

The US is considering reviewing capital investment of Chinese companies in the USA and possibly de-listing companies on existing exchanges. There is also talk of limiting US investment in China. This disrupted markets and equities which closed the week lower. The EUR drifted back to trade 1.0940, while the GBP crashed to 1.2285, following further Brexit chaos. The Brexit train crash continues on unabated and can only be determined in a general election.

The AUD remains under pressure, trading 0.6750, while the NZD surrendered 0.6300. These commodity currencies are extremely vulnerable to the US/China trade war and the new front, that has opened up on capital investment, does not help. US/China Trade negotiations resume on October the 10th so this week will be driven by speculation and developments. US Employment will come into focus later in the week, while the all-important NZ Business Confidence number, out Monday, has been known to move the local currency.

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