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AU capital expenditure falls 4.7% creating volatility in A$ trading; NZ$ weaker against Euro and US$

Currencies
AU capital expenditure falls 4.7% creating volatility in A$ trading; NZ$ weaker against Euro and US$

By Kymberly Martin

NZD

The NZD/USD has experienced a volatile 24-hours, sitting slightly lower at 0.8080 this morning.

The NZD/USD initially headed lower yesterday morning after the release of fairly dovish RBNZ commentary. It soon recovered, trading around the 0.8100 level for much of the night.

However, heading into the release of US Q1 GDP data the USD strengthened, dragging the NZD/USD as low as 0.8005.

After the subsequent disappointing data release the USD fell and the NZD/USD returned to trade at 0.8080 currently.

The NZD weakened against its European peers overnight. The NZD/EUR slipped from around 0.6260 to sit at 0.6200 this morning, its lowest level since mid-February.

Key support is now eyed around the 0.6150 level. The NZD/GBP is also sitting at its lowest level since mid-February, at 0.5300 this morning.

Today’s domestic data highlight will be the ANZ business confidence survey. We see it showing more of the same, in the sense of a strong pulse.

Today’s April credit aggregates will help be important in that the RBNZ has stated it is monitoring this data closely for signs of acceleration.

NZ terms of trade will also be released this morning. However, global factors will likely remain the key driver of the NZD at present. Key support for the NZD/USD remains close to 0.8000. Resistance is eyed at 0.8120.

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Majors

USD sentiment faded overnight. European currencies were the key beneficiaries.

The USD fell from favour overnight as US data was generally on the softer side of expectations. The 2nd  reading of US Q1 GDP came in at 2.4% ann. (2.5% expected).

US bond yields failed to push higher and the USD index slipped from highs above 83.70 to sit around 83.00 this morning.

The move was likely exacerbated by long USD positioning which needed to be pared back going into the traditional month-end portfolio rebalancing period.

Broadly, European currencies were the beneficiary. The EUR/USD moved from overnight lows around 1.2940 to trade around 1.3040 this morning. The GBP/USD also came along for the ride, currently trading around two week highs, at 1.5220.

The AUD/USD is slightly higher this morning. Over the past 24-hours it has twice touched key support around 0.9590 before rapidly rebounding. Yesterday’s Q1 AU capex report created some volatility in the AUD.

While Q1 capital expenditure was seen falling 4.7%, expectations for 2013/2014 show mining capex plans holding near current year levels. In addition, non-mining investment is on track for a 10% gain.

The AUD is desperately attempting to bottom after its rapid fall from grace since early May. The AUD/USD trades around 0.9660 currently.

Today, Japan will release April CPI data. With expectations at -0.7%y/y it remains miles from the Bank of Japan’s objective of 2.0% inflation.

Tonight, UK credit and mortgage data will be released. EU unemployment data and CPI estimate will also be released, along with the US Chicago PMI.

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