Prospects of slower cuts boost NZD appetite at year-lows [Video]

Even though Donald Trump’s tariff threats on China, Mexico and Canada didn’t concern Europe, the feeling in Europe was far from being comfortable yesterday. The word tariff gives cold chills especially to the European carmakers that already found themselves in crossfire with China. As such, Stellantis lost more than 5% yesterday while Volkswagen tanked another 2.76%.

In the US, the market mood was better. Trump’s tariff threat, the rising inflation expectations as a result of them, and the cautious approach for further rate cuts from the latest Federal Reserve (Fed) minutes were outweighed by ceasefire news from the Middle East.

Crude Oil consolidated and extended losses below the $70pb level on ceasefire news, while news that OPEC+ is considering delaying the oil production restart beyond January has certainly tamed the selling pressure.

In the FX, the US dollar eased yesterday as investors priced out a part of the geopolitical risks, while appetite in gold remained intact. The kiwi rallied against the greenback today following a widely expected 50bp cut from the Reserve Bank of New Zealand (RBNZ). But the RBNZ predicted that the average cash rate falling to 3.83% by the middle of next year, suggesting that the policymakers, there, will move to a more gradual rate-cutting path moving forward. The latter could open the door for dipbuying opportunities for a greatly weakened kiwi over the past year.