The big news overnight was a reset in relations between the UK and the EU. A new agreement was signed ahead of the big G7 meeting starting tomorrow. The news of closer relations between the UK and Europe may shock many, considering the people voted to leave the EU, in a binding referendum. The EUR and the GBP rallied on the news, with the GBP moving back towards 1.3400, while the EUR rose above 1.1250. Bond yields did reflect some caution, with UK Gilts yields jumping, following the news.
The weaker reserve allowed the commodity currencies to reverse recent losses, with the AUD looking to regain 0.6450, while the NZD pushed back to 0.5900. The RBNZ inflation report, showed inflationary pressures may be on the rise again, and this was confirmed with a jump in the NZ PPI numbers released. Attention now turns to interest rate decisions from the RBA and PBoC.
