Kiwi Dollar Opens as the Weakest of the G10 Currencies

The AUDUSD opens at 0.6875 (mid-rate) and the NZDUSD opens at 0.6371 (mid-rate) this morning.

The New Zealand dollar is the weakest of the G10 currencies down circa 2.0% against a surging British pound.

The NZD ran into further selling pressure on Friday after the BNZ Business NZ performance of manufacturing index remained below 50 for the second consecutive month, a reading below 50 indicates the sector is contracting. The last time the sector experienced a decline for two consecutive months was back in 2012 and has increased the chances of another interest rate cut out of the RBNZ next week. The AUDNZD cross rate is now trading at 2019 highs.

The GBP surged to its highest level against the USD since July on rising hopes that a no-deal Brexit could be avoided on October 31. Rumours that the British government could be softening its red lines on the so-called Northern Irish backstop along with a report in the Times suggesting the DUP had agreed to soften its stance on a Northern Ireland only backstop to help unlock a deal were the catalysts for the spike.

The week ahead will be dominated by Thursday’s economic data releases with Federal Reserve still heavily favoured to lower the federal funds rate by 25 basis points to a target range of 1.75-2.00%. with the market all but fully pricing in the cut investors will be more interested in the updated economic projections and dot plot.

Local interest will be focused on the latest employment report which is expected to show unemployment rate to tick up to 5.3% in August from 5.2% in July. Overall employment is expected to have increased by 10k, following July’s stellar 41k increase.

Crude oil prices are expected to surge after drones attacked the Abqaiq facility in Saudi Arabia and the Khurais oil field run by Saudi Aramco early Saturday morning. Early reports are that it may take weeks if not months to return to full oil supply capacity with oil futures up by as much as $10 per barrel.

Global equity markets inched higher on Friday - Dow +0.14%, S&P 500 +0.07%, FTSE +0.31%, DAX +0.47%, CAC +0.22%, Nikkei +1.05%, Shanghai +0.75%.

Gold prices edged down 0.7% on Friday closing out the week at $1,488 an ounce. WTI Crude Oil prices were little changed on Friday, closing out the week at $54.80 a barrel.

Upcoming Data Releases

Fixed Asset Investment ytd/y - 12:00 AEST / 14:00 NZST
         - Industrial Production y/y
         - Retail Sales y/y

Mid-Market Rates

AUDUSD0.68750.2%NZDUSD0.6371-0.5%AUDEUR0.62050.0%NZDEUR0.5749-0.7%AUDGBP0.5498-1.2%NZDGBP0.5105-1.7%AUDJPY73.89-0.5%NZDJPY68.52-1.1%AUDNZD1.07810.6%NZDAUD0.9271-0.7%GBPAUD1.81881.2%NZDCAD0.8415-0.6% GBPNZD1.95891.7%
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**Australia Morning Update  |  New Zealand Morning Update**