Wednesday 16th October 2019
|Text too small?|
The New Zealand dollar extended its decline against the British pound on signs negotiators are closing in on a Brexit deal.
The kiwi was trading at 49.15 British pence at 7:55 am in Wellington from 49.94 pence at 5pm yesterday. It was at 62.80 US cents from 63.02 cents. The trade-weighted index was at 69.84 from 70.02.
Britain and the EU made headway in eleventh-hour talks on Tuesday to reach a Brexit deal in time for a leaders’ summit, Reuters reported.
One EU official said an agreement was “close but not 100 percent certain”, adding “there are still parts that need to be nailed down”. Others were more cautious: one senior official said it was “way too premature” to conclude that a deal was at hand, Reuters said.
“Sterling surged as Brexit fears eased once again. The pace of negotiations is helping allay fears of another drawn-out process and reduces the odds of an extension being needed ahead of the current deadline. That said, the deal still needs to be voted on in Parliament,” said ANZ Bank FX/rates strategist Sandeep Parekh.
News that the International Monetary Fund had once against lowered its global growth forecasts also weighed on sentiment.
In its latest World Economic Outlook, the IMF said global GDP growth would be 3 percent in 2019 – the lowest level since the global financial crisis - and down from a July forecast of 3.2 percent.
“Rising trade and geopolitical tensions have increased uncertainty about the future of the global trading system and international cooperation more generally, taking a toll on business confidence, investment decisions, and global trade,” it said.
According to Finance Minister Grant Robertson, however, the IMF held its forecasts for New Zealand steady.
New Zealand is measured alongside a group of advanced economies by the IMF, he said. Growth across this group as a whole is expected to be 1.7 percent in each of 2019 and 2020 – down slightly from six months ago.
“Among this group, New Zealand’s growth forecasts have held steady at 2.5 percent in 2019, rising to 2.7 percent next year. This shows we’re in good shape,” he said.
“We know we’re not immune to the global situation. The surplus and low debt give us further opportunities to strengthen the economy."
Domestically the focus will be on this morning’s inflation data. Economists expect the consumers price index rose 0.6 percent in the latest quarter, taking the annual rate to 1.4 percent, down from 1.7 percent in the June quarter.
The New Zealand dollar was trading at 93.01 Australian cents from 92.99, at 56.94 euro cents from 57.12, at 68.37 yen from 68.25, and at 4.4478 Chinese yuan from 4.4570.
No comments yet
12th November 2019 Morning Report
MARKET CLOSE: NZ shares gain, retirement villages buoyed by Auckland housing market bounce
NZ dollar rises, shrugging off US-China trade war woes
Long-serving ACC investment chief calls it a day
Institutional investors continue to shun Fonterra
Card spending stalls; dearer petrol crowds out other goods
Abano directors cave to takeover by scheme of arrangement
Fletcher dismisses subcontractor claims as vague
11th November 2019 Morning Report
Odds favour a rate cut but it's a line ball call