Q3 earnings reports stronger, supporting Wall Street and keeping risk appetites healthy; Swiss voting on gold holdings

By Kymberly Martin

NZ Dollar

It has been a relatively quiet 24-hours of trading for the NZD/USD. Having touched above 0.7820 late last night, it now sits at 0.7760.

The upward momentum in the NZD/USD following Friday night’s US payrolls report, carried over into the start of the week.

However, in the early hours of this morning, the USD appeared to regain some composure.

This has resulted in the NZD/USD slipping back to a similar level as yesterday morning, at 0.7760. NZD/USD support continues to be seen at 0.7700, while resistance is eyed at 0.7790.

Moves on the crosses were undramatic. However, it is interesting to note the NZD/JPY has pushed back up to 89.10. Resistance remains at last week’s highs around 89.30, ahead of a push toward 90.00 that was last made in early-April.

However, more broadly we see the NZD/JPY trading in the high 80s for most of the year ahead, as both currencies weaken relative to the USD.

It looks to be another relatively quiet day ahead. NZ electronic card transactions are due. RBNZ Deputy Governor Spencer is scheduled to speak at the Payments NZ conference, but it is unlikely to be market moving.

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Majors

In a quiet start to the week, the NOK and NZD marginally outperformed a stronger USD.

It was never looking to be an exciting night, with little on the data agenda, and the US likely in long-weekend mode ahead of today’s Veteran’s Day holiday.

Equities provided solid positive returns with the Euro Stoxx 50 closing up 1% and the S&P500 currently up 0.3%. With 90% of the S&P500 companies having now reported for Q3, the positive earnings surprise sits at 5.25%. Earnings continue to provide a fundamental underpinning for equities. Commodities were generally a little softer overnight. The WTI price is off a further 1.2% whiles gold is down 1.8%.

In the absence of significant data releases or news flow the USD index sidled sideways overnight, before making a push higher in the early hours of this morning. In mirror-image the EUR/USD made highs above 1.2500 around midnight, before falling to 1.2430 currently.

The USD/JPY appears to be making another attempt on the 115.00 level, having pushed up to 114.80 currently. Ultimately we see the USD/JPY pushing higher to reach 123.00 by the end of next year.

Meanwhile, the EUR/CHF is drawing some attention as it inches closer to the 1.20 floor the Swiss National Bank has vowed to defend. It has not been at this level since September 2012. The driver of the latest moves appears to be a pending (Nov 30) Swiss referendum on whether the SNB should increase its gold assets from 8% now, to at least 20%. The market is speculating if the vote is ‘yes’ the SNB will need to fund it by selling foreign reserves, much of them in EUR.

The AUD/USD sits a little lower this morning at 0.8630, ahead of the AU NAB business confidence survey today.  Today, September Japanese current account data is also due.

All its research is available here.