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S&P 500 index hits record highs as US data uniformly surprises to the upside; NZD recovering after dipping on weaker consumer confidence data

Currencies
S&P 500 index hits record highs as US data uniformly surprises to the upside; NZD recovering after dipping on weaker consumer confidence data

By Kymberly Martin

NZ Dollar

The NZD/USD has climbed its way back up to 0.8400 this morning, from yesterday’s lows below 0.8360.

The NZD appeared to largely ignore yesterday morning’s strong NZ migration data. But it dipped after the release of the ANZ Consumer Confidence index that pulled back to 125.5 in August, from a hearty 132.7 previously.

It shows the market’s current propensity to focus on perceived loss of momentum in the NZ economy.

However, the NZD/USD found its feet overnight as the USD broadly weakened. It has traded back up to above 0.8400 currently. The NZD also pushed higher on most of the crosses.  The NZD/EUR and NZD/GBP sit close to 0.6330 and 0.5070, respectively, this morning.

The NZD gapped higher against the AUD early yesterday afternoon after the release of a softer than expected HSBC China Manufacturing PMI. Subsequently the cross has managed to hold onto most of its gain to trade around 0.9035 this morning.

There are no domestic data releases today. With little also on the global data agenda, the market is likely to trade relatively tight ranges ahead of the key event risk this weekend, Fed Chair Yellen’s speech at Jackson Hole.

NZD/USD support is now seen at the overnight lows around 0.8350. Resistance is eyed at 0.8440.

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Majors

The USD has given up much of its post-Fed Minute gain. The GBP has underperformed while the NOK has been the strongest performer over the past 24-hours.

Market sentiment overnight was generally quite buoyant as US data uniformly surprised to the upside. This included the Manufacturing PMI (58.0 vs. 55.7), Philadelphia Fed survey (28.0 vs. 19.7) and July housing starts (2.4%m/m vs. -0.5%).

Equities posted solid positive returns on either side of the Atlantic, with the Euro Stoxx 50 up 1.3%. The S&P500 has risen to a record high.

Despite this, neither US bond yields nor the USD index could push higher. The market is likely looking toward Fed Chair, Yellen’s speech at Jackson Hole this weekend. The risk is she pours cold water over yesterday’s Fed Minutes by reverting to a highly dovish script on the US labour market. The USD index trades just above 82.10, this morning.

The EUR experienced a pop higher last evening after the release of German PMI data that came in above expectation. It managed to cling on even after subsequent data showed the July Eurozone composite PMI to be slightly below expectation (52.8 vs. 53.4). The EUR/USD sits at 1.3280 this morning.

The NOK had a striking gap higher after the release of Norwegian Q2 GDP figures. These showed growth of 1.2%, twice the rate expected by consensus. It likely closes the door to expectations for further rate cuts from the Norges Bank. The USD/NOK fell from 6.200 last evening to sit at 6.150 this morning.

The AUD/USD fell sharply yesterday afternoon after the release of the August HSBC China Manufacturing PMI (50.3 vs. 51.5 expected). But having touched below 0.9240 it has clawed its way back to trade above 0.9300 this morning.

Today it is very quiet on the data front globally. Canadian CPI will be released tonight. It will be all eyes on Yellen’s speech at Jackson Hole this weekend.

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Source: CoinDesk

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