Kiwi drops to four-year low

 

Business confidence sinks

The Kiwi slumped across the board after ANZ’s business confidence indicator slumped to -52.3 in August, a sharp drop from July’s -44.3 print and the weakest level since April 2008. NZD/USD fell as much as 0.39% to hit 0.6310, the lowest level since September 2015 while NZD/JPY declined to its weakest since November 2012. NZD/USD is now at 0.6320 and is facing its fourth down-day in a row.

 

NZD/USD Daily Chart

Source: OANDA fxTrade

 

Aussie also hit by weak data

The poor data flow was not just restricted to New Zealand, with Australia’s private capital expenditure falling 0.5% in the second quarter, disappointing analysts who had been expecting a rebound to +0.5% from -1.7% in Q1. AUD/USD slid 0.13% to 0.6724 and is now at 0.6731.

 

Trade talks still on

US Treasury Secretary Steven Mnuchin said that US officials are still expecting Chinese negotiators to visit Washington, but was non-committal whether the previously-planned September meeting would go ahead. Relations have soured in the past couple of weeks since the US team was last in China, with the US labeling China as a currency manipulator on August 5 and Trump adding an extra 5% to all tariffs, while China added a retaliatory 5-10% tariff on $75 billion worth of US imports last week.

Separately, White House trade adviser Navarro reiterated that it was unlikely that anything would happen quickly in the trade talks. On August 9 he said talks would play out over the next “several months”.

 

Euro-zone confidence seen weak

A slew of confidence indicators for August are due to be released today. Consumer and industrial confidence as seen steady at -7.1 and -7.4 respectively, but the economic sentiment indicator is expected to slide to 102.3 from 102.7. That would be the weakest reading since February 2015.

 

Anticipating a downward revision to US Q2 GDP

Market analysts are anticipating a downward tweak to US Q2 GDP growth, with the latest survey showing a drop to +2.0% from the first estimate of +2.1%. We can also expect wholesale inventories and the goods trade balance for July along with pending home sales. Sales are seen flat month-on-month after a 2.8% increase the previous month.

 

The full MarketPulse data calendar can be viewed at https://www.marketpulse.com/economic-events/

 

 

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Andrew Robinson

Andrew Robinson

Senior Market Analyst at MarketPulse
A seasoned professional with more than 30 years’ experience in foreign exchange, interest rates and commodities, Andrew Robinson is a senior market analyst with OANDA, responsible for providing timely and relevant market commentary and live market analysis throughout the Asia-Pacific region. Having previously worked in Europe, since moving to Singapore he worked with several leading institutions including Bloomberg, Saxo Capital Markets and Informa Global Markets, proving FX strategies based on a combination of technical and fundamental analysis as well as market flow information. Andrew began his career as an FX dealer with NatWest and the Royal Bank of Scotland in the UK.