by Kymberly Martin
NZ Dollar
The NZD/USD sits notably higher at 0.8370 this morning. The NZD was a beneficiary of fairly placid markets overnight and solid risk appetite, in the wake of last Friday’s payrolls release.
The NZD/USD gapped through the technical resistance level around 0.8340 overnight (which marked the early December highs). It rapidly pushed up to touch above 0.8380 before returning to trade at 0.8370 this morning.
The move will also have triggered a long position in our fx momentum model, as the currency broke through 0.8319. The NZD/USD is now trading at its highest level since late November.
Today, the domestic focus for the currency will be the release of the Q4 2013 Quarterly Survey of Business Opinion.
It will likely simply confirm the relative strength of the NZ domestic economy which provides an underpinning for the NZD near-term.
Today, November highs around 0.8410 will now be in the sights of the NZD/USD. A break above this level would open the way for a return to the October highs (around 0.8550).These levels are still within the ‘fair value’ range represented by our short-term fundamental valuation model.
The NZD also showed steady positive progress against its key European peers overnight. The NZD/GBP climbed steadily from around 0.5050 to above 0.5110 this morning, its highest level since late November. Similarly, the NZD/EUR is at its highest level since late November, at 0.6130 this morning.
Moves in the NZD/AUD cross were less spectacular, as it bobbed around between 0.9210 and 0.9240 overnight. It sits at the upper-end of this range at present.
Impetus for the cross today will most likely come from the release of the NZ QSBO in the absence of any scheduled AU data releases.
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Majors
While the USD index is fairly flat over the past 24-hours, the JPY was the strongest performer. The AUD and NZD also outperformed, while the GBP underperformed.
Overnight, there was little data flow to drive markets as it continued to mull Friday’s US payroll release.
Risk appetite remained fairly firmly intact. Our risk appetite index (scale 0-100%) remains at a solid 71%.
he Euro Stoxx 50 returned 0.25% while the S&P500 is currently down 0.6%. Global commodities have bounced off their recent lows. On Friday, the global CRB commodity index was trading at its lowest level since June last year. It has subsequently bounced by 1.3%.
The USD index and EUR were relatively range-bound although the USD index has pushed a little higher in early morning trading. It sits at 80.60 this morning while the EUR/USD trades at 1.3660.
The JPY was the strongest performer over the past 24-hours. The USD/JPY fell toward 103.00 overnight. Stop-loss selling through 103.90 seems to have propelled the JPY lower, in what were otherwise thin markets, especially with Japan shut for a public holiday.
The NZD and AUD were key beneficiaries of otherwise relatively stable trading overnight. The AUD/USD pushed up to above 0.9080 early this morning, before returning to trade at 0.9060 currently. This is the currency’s highest level since early December. There are no AU data releases of note today, as the market awaits the data highlight of the week, Thursday’s AU employment report. The next key resistance level for the AUD/USD will be encountered at 0.9140.
Tonight, UK house price and CPI data will be delivered. In the US, December retail sales data will be released while Fed members Plosser and Fisher and scheduled to speak. However, the market has shown more inclination of late to react to hard data rather than ‘Fed speak’.
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