Collinson FX: August 7, 2018 - US rates expected to rise

by Collinson FX 7 Aug 2018 17:51 PDT 8 August 2018

Oceanbridge NZL Sailing Regatta, Day 2, February 5, 2018 © Yachting New Zealand

Collinson FX: August 7, 2018 - NZD slips further

US Markets continued to rally strongly, supported by a strong economy, with the Fed expected to raise rates twice more this year!

The strong growth is being reflected in inflation and thus monetary policy. The EUR fell to 1.1550, while the GBP plunged to 1.2940, amidst Brexit speculation of a no deal. The intransigence of the EU, over negotiation, has lead to a likely prospect of no deal by March.

Trade wars continue, with new sanctions imposed on Iran, while the US now considers new tariffs on Canada. NAFTA is seen as a likely deal, but recent differences with Canada, mean Trump will up the stick approach. China still resists, but the US is now threatening to raise the 10% tariffs to 25%, on $200 Billion worth of Chinese goods. This is a threat to trade exposed countries, with the AUD trading 0.7380, while the NZD slipped to 0.6725.

Trade remains a threat but global economic conditions are gaining strength.

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