By Kymberly Martin
NZD
The NZD was the weakest performer over the past 24-hours.The NZD/USD has broken key support levels to now sit at 0.8040.
In an announcement yesterday afternoon, Fonterra revised down their forecast payout range for the 2012/2013 milk season from $5.90-$6.00 to $5.65-$5.75. Though clearly negative it was not a huge surprise given the recent softer trend in world dairy prices. Still, the NZD fell sharply on the news.
Overnight, it continued to drift a little lower to sit just above 0.8040 currently. If the currency continues its drift lower the next support level is eyed at 0.7990. There is little in the way of local data releases today, so direction will be determined by global risk appetite, and headlines.
The NZD performed poorly on the crosses also. It was on a steady downward path overnight relative to its European peers.
The NZD/GBP now trades at its lowest level since late July, at 0.5080. Similarly the NZD/EUR has slumped to 0.6400, a key support level.
The sharp fall in the NZD/AUD has continued, taking the cross to 0.7750. There are no significant data releases on either side of the Tasman today.
For now, the market’s attention appears to have shifted from concerns regarding the outlook for AU commodities to questioning the outlook for NZ’s prime commodity, milk. Tomorrow, the NZ data highlight for the week will be the NBNZ business confidence survey.
------------------------------------------------------------------------------------------------------------------------------------------
To subscribe to our free daily Currency Rate Sheet and News email, enter your email address here.
------------------------------------------------------------------------------------------------------------------------------------------
Majors
Despite renewed focus on European funding issues, the USD lost ground to a stronger EUR overnight.
The general mood in markets remains one of anticipation ahead of Friday’s Jackson Hole meeting. Our risk appetite indicator (scale 0-100%) has slipped a little to 67%. Equities have recorded modest negative returns.
In the lull before the much anticipated meeting the market has been grasping at headlines for direction. Last night, the market seized on an announcement that ECB President Draghi has cancelled his visit to Jackson Hole as the ECB concentrates on preparations for its own meeting on Sept 6.
Is it planning to pull its own rabbit out of the hat? Also featuring in headlines was the Spanish region of Catalonia’s application for aid from the sovereign. The EUR/USD managed to make some headway, rising to sit around 1.2560 at present.
Conversely, the USD index slumped from 81.70 to sit just above 81.30, just above support we see at the 81.20 level.
After slipping yesterday afternoon, the AUD has managed to claw its way back up to 1.0380 overnight. The market continues to price around 75bps of RBA rate cuts by 12 months time.
Our NAB colleagues do not expect further cuts. Still, there is nothing in the immediate data calendar to challenge these market assumptions.
Tonight, the US releases its second reading of Q2 GDP along with pending home sales data. The market will look for this data to support that released last night that showed that the worst is likely past for the US housing market.
The S&P Case-Shiller index showed house prices in the US rising for the first time since the tax-credit induced boost of 2010. The Fed’s Beige book will also be released tonight. These will all be influences on the Fed’s ultimate decision on how/if to extend policy easing, which may be elaborated on during the Jackson Hole gathering.
Event Calendar: 29 August: AU construction; US Q2 GDP; US pending home sales; US Fed Beige Book 30 August:NZ building permits; NZ NBNZ business confidence; JN retail trade; AU Capex; AU building approvals; GE unemployment; US personal income & jobless claims; 31 August: JN CPI & jobless rate; EU CPI; ECB’s Coeure & Nowotny speak; US Fed’s Bernanke speaks at Jackson Hole Economic Symposium.
No chart with that title exists.
1 Comments
Thinking about Jackson Hole Credit Suisse offered some go short bond trading advice.
There again sceptic John Ward thinks the ECB's absence from JH is indicative of a "Bazooka" injection to save the failing Spanish banking system.
The regions of Spain don’t come much more affluent than Catalonia. So the depth of Spain’s problem was made brutally clear this morning when the Catalans officially requested the full works – total bailout – hoping to apply for a cool €5.23 billion from Madrid. I understand that Mario Draghi knew about this last Friday, but it isn’t the only thing on his radar.
Messy week ahead.
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.