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
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.
