The NZDUSD opens at 0.7224 (mid-rate) this morning.
The Kiwi is up against most of its trading partners, but continues to be weak against the CAD and GBP. All eyes are now focused on the Fed Rate announcement tomorrow morning at 6am NZT, and the FOMC statement at 6:30am NZT.
The UK had a myriad of news on the wires overnight. The UK Consumer Prices Index (CPI) including owner occupiers’ housing costs 12-month inflation rate was 2.7% in May 2017, up from 2.6% in April. The rate has been steadily increasing following a period of relatively low inflation in 2015 and is at its highest since April 2012.
U.K. inflation resumed its upward march last month, accelerating more than forecast to the fastest pace in four years. An increase in prices for computer games, laptops and package holidays -- partly reflecting the impact of the weaker pound -- lifted the inflation rate to 2.9%, the highest since June 2013. Economists had forecast that it would remain at 2.7%.
U.K. Core inflation, which excludes food and energy, also unexpectedly increased in May, according to the Office for National Statistics. It reached 2.6%, the highest since November 2012.
The annual rate of U.K. Producer Price Inflation remained at 3.6% for the third consecutive month and slowed on the month to 0.1%, from 0.4% in March and April. The annual rate of inflation for materials and fuels (input prices) fell back to 11.6% in May, continuing its decline from 19.9% in January 2017 following the recent strength of sterling. The rate of increase in factory gate prices appears to be stabilising now that manufacturing input costs have largely fallen month-on-month since January.
The ZEW Indicator of Economic Sentiment for Germany dropped by 2.0 points in June 2017 and now stands at 18.6 points. The indicator thus still remains below the long-term average of 23.9 points. By contrast, the assessment of the current economic situation in Germany improved once again in June. The indicator climbed by 4.1 points to 88.0 points. This is the highest level since July 2011. Despite a slight drop in expectations, the prospects for the economic growth in Germany in the coming six months remain positive.
The U.S. Producer Price Index for final demand was unchanged in May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.5% in April and edged down 0.1% in March.
For the first time in 3 years, U.S. Core Producer Prices have risen at a faster pace than The Fed's mandated 2% target. May PPI (ex food and energy) rose 2.1% year-over-year, the highest since May 2014, as goods prices tumbled (gasoline, motor vehicles, fresh fruit) while services costs (retailer and wholesaler prices, and residential lending) jumped.
Global equity markets are mixed - Dow +0.38%, S&P 500 +0.38%, FTSE -0.15%, DAX +0.59%, CAC +0.40%, Nikkei -0.05%, Shanghai +0.44%.
Gold prices are unchanged at $1,266 an ounce. WTI Crude Oil prices have pushed higher again, currently up another 0.7% at $46.43 a barrel.
Current indicative rates:
NZDUSD 0.7224 0.2%
NZDEUR 0.6443 0.2%
NZDGBP 0.5664 -0.5%
NZDJPY 79.45 0.4%
NZDAUD 0.9579 0.2%
NZDCAD 0.9557 -0.5%
GBPNZD 1.7648 -0.4%
Upcoming Data releases (NZST):
- 10:45am - NZD - Current Account
- 10:45am - NZD - FPI m/m
- 12:30am - AUD- Westpac Consumer Sentiment
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here »
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