By Kymberly Martin
NZD
The NZD has sneaked a little higher to sit at 0.8280. The currency took yesterday’s Quarterly Employment Survey (QES) in its stride.
We drew two main conclusions. First, that New Zealand’s wage and salary growth is ticking along at a rate that is at least average. Second, that Q3 employment and GDP might yet prove reasonable (countering other data of late that have warned of a rough patch for the economy in the quarter).
Overnight, the Fonterra milk price auction showed the uptrend since May continues.
The NZD lifted by around +1.6% since the previous auction, more than offsetting the move in world prices for those looking at prices expressed in NZD. So nothing to relieve any concerns that the RBNZ might have around the strength of the NZD.
However, the NZD was underpinned overnight by generally solid risk appetite (see Majors). The NZD/USD found resistance at 0.8290, sitting just below this level at present.
The NZD failed to maintain gains relative to its European peers overnight returning to trade at similar levels to yesterday morning. The NZD/EUR currently trades just below 0.6460.
On the crosses the real action over the past 24-hours has come from the NZD/AUD. Yesterday, the RBA remained ‘on hold’ eliciting an abrupt response from the NZD/AUD.
A surge higher in the AUD saw the cross gap from 0.7960 to 0.7920. The NZD/AUD soon gained its composure and has traded around 0.7930 for most of the night. Key support is now eyed at 0.7900.
Today, markets will remain focused on the results of the US election as they trickle out. In this backdrop, it is unlikely the NZD will show much response to the release of the RBNZ Financial Stability Report scheduled for today.
------------------------------------------------------------------------------------------------------------------
To subscribe to our free daily Currency Rate Sheet and News email, enter your email address here.
------------------------------------------------------------------------------------------------------------------
Majors
Currency markets continue to be fairly subdued as voting in the US election is underway. The AUD was the strongest performer over the past 24-hours.
With voting in the US election underway the outcome is still a close call. Results will trickle out during our day. For now, our risk appetite index has ticked up to 70% and equities have put in a solid performance.
The Euro Stoxx 50 has closed up 0.70% and the S&P500 is up 1.0%.
By contrast, bond and currency markets are more agnostic, trading fairly tight ranges. The USD index has slipped a fraction to 80.60.
The EUR/USD has crept a little higher in the early hours of this morning. Eurozone data releases overnight however were uninspiring.
The final reading of the Eurozone composite PMI for October confirmed activity remains firmly in contraction, at 45.7. German September factory orders were also disappointing at -4.7%y/y (-1.5% expected).
However, the EUR/USD has inched up to 1.2820. This likely reflects improved risk appetite and diminished demand for the ‘safe haven’ USD as opposed to positive sentiment toward the EUR per se, as Greek headlines continue to vie for attention.
The AUD was the star performer over the past 24-hours after the RBA kept the cash rate unchanged yesterday.
The AUD/USD gapped through the top of its 1.0150-1.0410 trading range. It now sits at 1.0440. If global risk appetite remains buoyant the currency will likely set its sights on mid-September highs of 1.0600.
Today, all eyes will remain on the result of the US election as they continue to drift out. Tonight, attention may move across the Atlantic as ECB President Draghi is scheduled to speak in Frankfurt.
Event Calendar:
7 November: NZ RBNZ FSR; EU retail sales; 8 November: NZ HLFS; JN Current account; NZ consumer confidence; AU employment; UK BoE meeting; EU ECB meeting; 9 November: NZ ECT data; CH data slug; EU finance ministers seek agreement on 2013 EU budget.
No chart with that title exists.
All its research is available here.
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.