by Kymberly Martin
NZ Dollar
The NZD has crept a little higher to sit around 0.8340 this morning.
Yesterday’s BNZ PMI showed NZ’s manufacturing sector started 2014 on a healthy note. January’s reading of 56.2 is well above 50, the level that separates expansion from contraction. It is no surprise.
The New Year looks much like last year, with January’s result sitting between December’s 56.4 result and the 2013 average of 56.0.
Manufacturing growth continues despite the general strength of the NZD.
However the currency showed no great response to the data. It was not until later in the day, and the release of the disappointing AU employment report that the NZD was spurred into life.
The NZD/AUD was catapulted higher on the data, from 0.9220 to 0.9300. However, the NZD still managed to suffer some contagion from the falling AUD, and declined against the USD.
The NZD/USD then found support just above 0.8290 overnight and has subsequently climbed back to 0.8340.
Over the past 24-hours the NZD/JPY has traded a decent-sized range from 84.70 to 85.40. But it has broadly consolidated its recent rebound from early-Feb lows. It now sits almost 5% above those levels.
Today, it is a low-key end to the week domestically, with only food prices scheduled for release.
Key resistance for the NZD/USD remains just above the 0.8400 level. Support is eyed at 0.8290.
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Majors
Most major currencies saw a fairly sedate 24-hours, except for an understandable drop for the AUD and a mysterious pop higher for the EUR.
The AUD/USD was laid low by an Australian labour market report that saw the unemployment rate reach the 6% mark faster than anticipated, and headline employment fall by 3.7k. The details were also poor, with that headline number masking a 7.1k fall in full-time employment.
The AUD/USD dropped by 0.9% to 0.8950 on the release. It has lost all the gains made on the back of the previous stronger domestic business confidence and Chinese trade data. It has subsequently crept a little higher but remains below 0.9000 this morning.
Curiously, the EUR/USD popped 0.5% higher early in the London trading session. In the absence of relevant data releases, rumours abound of a large EUR/USD purchase by an asset management name.
Whatever the reason, the move erased Wednesday night’s fall following the weak factory data and dovish ECB comments. The EUR/USD sits just below 1.3670 this morning.
The weak US January retail sales print overnight (-0.4%m/m vs. 0.0% expected) seems to have had little impact on the USD index. While cold weather was partly to blame for the soft data, this latest print coupled with the latest international trade data will see downward revisions to US GDP estimates.
The softening tone of US data, especially with regard to consumption, might see greater attention paid to US consumer confidence numbers, due for release tonight (University of Michigan Confidence survey).
Other highlights will be the first readings of German and Eurozone Q4 GDP.
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