NZ: Trade Deficit widening – TD Securities

With domestic inflation still lagging behind the RBNZ, policymakers appear to be increasingly turning to a rate cut, widening the political divergence between the RBNZ and the Hawkish Federal Reserve. If inflation and growth are expected to increase, this could be bullish for the pound sterling as it implies further interest rate hikes and higher interest rates are usually positive for a currency. With the effects of slower summer consumption spending, the UK economy is likely to come under increasing pressure due to the Brexit-based uncertainty. Employment growth may have been slightly lower than expected, but with rising imports, the economy appears to be developing solidly, ‘said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. The increase in the trade deficit could lead to a growing current account deficit, which is more difficult to finance in an environment of rising yields, which is the long-term headwinds for NZD in the form of Household debts, “says Redeker. Even before interest rates become too high to support the economy, the consequences of the increased supply problem for average Americans could be felt, as Fink fears. You will see this in things like mortgage rates and car loans.

Economists had expected an increase of 210,000 jobs in the private sector in May. However, many analysts said the report had not changed their expectations for the more comprehensive government employment data due on Friday. Analysts at Danske Bank expect pressure on the Bank of Canada to increase in line with the global easing trend. Given that the currency pair is currently forecasting price losses against the CAD, they expect to see further gains for the CAD over-valued compared to estimates of fair value.

The stock price then fell 12 cents a share, says McDonald Vague. Rising prices often persist, retreat, or sometimes even reverse at the high moving averages of the 50-month prices, as they are used by large speculators, fund managers, and retailers as a decision-making tool, and therefore are above average high liquidity. US Treasury prices fell as the dollar rallied against a basket of currencies. The current prices in the interest rate derivatives markets, which allow investors to hedge against changes in interest rates and to provide insights into investors’ monetary expectations, suggest that the market does not see this and that RBNZ prices will rise before May 2019. Base metal prices rose broadly on Tuesday in London amid a more positive sentiment as China remained subdued in its immediate reaction to the recent round of tariffs.

For the pound, economic news releases are limited to June’s CBI industrial orders, which are forecasted positive for the pound. However, the direction throughout the day will depend on the mood surrounding tomorrow’s decision of BoE policy and, above all, on the number of votes. This would influence the market outlook for the policy later in the year. Even if the data does not disappoint and the Loonie continues to appreciate, the Bank of Canada (BoC) may be forced to intervene to stop CAD strength in the current climate of falling global demand. Sectoral import data show that the largest-growth categories are capital goods, followed by energy-related products, says Hans Redeker, FX strategy director at Morgan Stanley.