By Kymberley Martin
NZD
The NZD/USD was fairly range-bound yesterday, but got a leg up overnight on the back of generally robust risk appetite. It currently trades just under 0.8400.
Yesterday’s Q4 NZ terms of trade data showed cracks in the external accounts.
While export prices rose 1.8% in the quarter, import prices rose even stronger. As a consequence, New Zealand's terms of trade actually fell 1.4% across the quarter. Not only was this the largest quarterly drop since Q3 2009 but it was the second consecutive decline.
Alas, we believe this is the start of things to come. However, the NZD appeared to largely overlook the data, being fairly range-bound yesterday.
Overnight, the NZD gained some upward momentum as risk appetite was buoyed by solid PMI releases, and the trickle through effects of the LTRO auction uptake (see Majors and Fixed Interest). The NZD/USD moved up from around 0.8320 to trade at close to 0.8400 currently.
The NZD made steady gains versus its European peers. The NZD/EUR rose from 0.6250 to just under 0.6310, at present. The NZD/GBP has moved up from 0.5240 to above 0.5260, still comfortably in its trading range of the past month, or so.
On the NZD/AUD cross, trading was somewhat choppier. However, after dipping lower last night it has returned to trade at the familiar 0.7770 level.
The ANZ commodity price index will be released today. There are no key global releases. NZD/USD support is seen at 0.8340, and resistance continues to be eyed at 0.8420.
------------------------------------------------------------------------------------------------------------------------------------------
To subscribe to our free daily Currency Rate Sheet and News email, enter your email address here.
------------------------------------------------------------------------------------------------------------------------------------------
Majors
The best performing currencies over the past 24-hours were the “risk sensitive” commodity currencies, AUD, NZD and CAD. The USD outperformed the EUR.
It was an evening of fairly robust risk appetite. Our risk appetite indicator (scale 1-100%) has moved up from 60-62%. In equity markets the Euro Stoxx 50 closed up 1.45% and the S&P500 is currently up 0.75%.
The market was still basking in the glow of the strong uptake of the ECB’s LTRO the previous night, that appears to have staved off the threat of financial dislocation in Europe, for now. In addition, the slew of Manufacturing PMI from Asia, to Europe and the US showed a general sense of consolidation rather than downward momentum. In this backdrop, the USD index was fairly range-bound between 78.70 and 78.90, trading around 78.80 currently.
Trading in the EUR was slightly choppier. The currency appeared to be underpinned last night by its Manufacturing PMI that remained at the 49.0 level. Although this designates activity is still in contraction, the level now appears to have stabilised, after bottoming at 46 last November. Less comforting was data showing the Eurozone unemployment rate has ticked up to 10.7% (10.6% previously). The EUR/USD touched highs above 1.3350 last night, before drifting off to 1.3310 currently.
The GBP/USD was on the ascendancy last night, helped by some decent UK data. Nationwide house prices rose 0.6%m/m in February (0.2% expected). The UK Manufacturing PMI slipped form 52.1 to 51.2, but still remained firmly in expansion. The GBP/USD moved up from 1.5920 last evening, to just under 1.5950 currently.
The “commodity-linked” AUD and CAD were on a gradual upward trajectory over the past 24-hours. Chinese Manufacturing PMI data showed a move in the right direction (51.0 from 50.5 previously).calming fears of a hard-landing form this commodity-hungry economy. In addition, the AU Manufacturing PMI remained in expansion (51.3 vs. 51.6 previously). The AUD/USD moved up from around 1.0720 24-hours ago to trade at 1.0800 currently. This raises the prospect of the currency attempting to retest the 1.0850 resistance level today.
There is a lack of data releases today, so expect markets to take their cues from general sentiment, as they continue to absorb incremental news-flow from Europe.
No chart with that title exists.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.