The Opening Bell: Where currencies start on Thursday, September 7, 2017

By Dan Bell

The NZDUSD opens at 0.7187 (mid-rate) this morning.

The Kiwi fell against all the G10 currencies overnight as the Kiwi was sold heavily in the US session, and after the Bank of Canada rate hike which surprised many analysts, who had not expected another rate increase until at least October.

The Bank of Canada has hiked its key interest rate for the second time in less than two months amid surprisingly resurgent growth across the country. The central bank raised its overnight lending rate by 0.25% to 1.0%. The Kiwi is down 2.0% against the CAD from this time yesterday.

Supporting the reason for another hike – Canadian Consumer spending remains robust, underpinned by continued solid employment and income growth. There has also been more widespread strength in business investment and in exports. Meanwhile, the housing sector appears to be cooling in some markets in response to recent changes in tax and housing finance policies.

Canada’s merchandise trade deficit totalled $3.0 billion in July, narrowing from a $3.8 billion deficit in June. Imports fell 6.0% and exports decreased 4.9%, both due mainly to the effect of widespread price decreases, while the Canadian dollar appreciated sharply relative to the American dollar in July.

U.S. Trade Balance showed the goods and services deficit was $43.7 billion in July, up $0.1 billion from $43.5 billion in June, revised. July exports were $194.4 billion, $0.6 billion less than June exports. July imports were $238.1 billion, $0.4 billion less than June imports. The July increase in the goods and services deficit reflected a decrease in the goods deficit of less than $0.1 billion to $65.3 billion and a decrease in the services surplus of $0.2 billion to $21.6 billion.

The latest U.S. Non-Manufacturing ISM registered 55.3% in August, the 92nd consecutive month of growth and was up from 53.9% in July. The U.S. Non-Manufacturing Business Activity Index increased to 57.5%, 1.6 % points higher than the July reading of 55.9%, reflecting growth for the 97th consecutive month, at a faster rate in August.

Global equity markets are mainly higher: Dow +0.39%, S&P 500 +0.43%, FTSE -0.25%, DAX +0.75%, CAC +0.29%, Nikkei-0.14%, Shanghai +0.03%.

Gold prices gave up yesterday’s gains, down $11 or 0.8% currently trading at $1,333 an ounce. WTI Crude Oil prices rallied 0.9% currently trading at $49.10 a barrel.

Current indicative rates:

NZDUSD       0.7187      -0.8%
NZDEUR       0.6032      -0.7%
NZDGBP       0.5511      -0.8%
NZDJPY         78.56       -0.2%
NZDAUD       0.8991      -0.7%
NZDCAD       0.8793      -2.0%
GBPNZD       1.8146       0.8%

Upcoming Data releases (NZST):

  • 11:30am – AUD – AIG Construction Index
  •  1:30pm – AUD – Retail Sales m/m
  •  1:30pm – AUD – Trade Balance

 

 

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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here »

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