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AUD 'worst' performing currency overnight, dragging Kiwi with it; eyes on Fed minutes, NZ PPI

Currencies
AUD 'worst' performing currency overnight, dragging Kiwi with it; eyes on Fed minutes, NZ PPI

By Kymberly Martin

NZ Dollar

The NZD/USD has traded lower since yesterday morning to sit around 0.7860 at present.

After yesterday morning’s soggy GDT dairy auction, negative sentiment toward the NZD prevailed, in the absence of any other key domestic data releases yesterday.

The NZD/USD has drifted steadily lower before finding support at 0.7840 overnight. It has subsequently consolidated above this level, to trade at 0.7860 ahead of this morning’s US Fed Minutes (8am NZT).

There were some notable moves on the crosses overnight. The NZD weakened relative to the EUR and GBP but strengthened versus the AUD. The GBP was boosted by slightly less dovish Bank of England Minutes. This helped the NZD/GBP fall to trade just above 0.5010 this morning. The NZD/EUR has also slumped to trade just above 0.6260 at present.

The NZD/AUD was on the ascendancy from late last evening, to trade just below 0.9120 currently. Resistance remains around the 0.9150 level that has marked the highs on the cross since early-August. The lower end of this range is marked at 0.8850.

Today ANZ job ads and NZ PPI will be released. Ahead of this, it is all eyes on the US Fed Minutes. Focus will be on the Fed’s assessment of slack in the labour market, inflationary developments and the decision to retain the “considerable time” phrase in its October statement.

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Majors

Over the past 24-hours the GBP has been the strongest performer and the AUD the weakest.

The market appeared to be a little bit in ‘wait and see’ mode ahead of the release of US Fed Minutes this morning. Equity markets were relatively flat on both sides of the Atlantic and the USD index sits at a similar level to yesterday morning, despite some intra-night volatility.

The GBP popped higher on the release of Bank of England Minutes last night. These showed a “material spread of views” among voters, suggesting the dovish majority is a little less cohesive. Some members are beginning to raise concerns about the threat of inflationary pressures. From below 1.5600 the GBP/USD now trades around 1.5670.

Meanwhile the EUR/USD briefly broke higher in the early hours of this morning, to trade above 1.2570. However the move was not sustained and it has returned to trade at 1.2550 currently.

The JPY has traded a fairly steady path of decline over the past 24-hours. The Bank of Japan’s Kuroda warned that there was a possibility of inflation falling below 1 percent, given commodity price falls. From 116.90 last evening the USD/JPY now trades at 117.70.

But it was the AUD/USD that took out the prize of worst performer. It has declined 1.25% since this time yesterday, to trade at 0.8620 this morning. Key support is now eyed at the early November lows of 0.8540. Today the RBA will release its October FX transactions data. Of importance for the AUD will also be the release of the HSBC November PMI today. Consensus expects this to remain in expansion at 50.2.

Following this morning’s release of the US Fed’s Minutes there is a busy offshore data agenda. Japan, Eurozone and US PMI data will be released. US October CPI release will also grab some attention this evening. Consensus expects core CPI to be running at 1.7%y/y. The Fed’s Mester is also scheduled to speak on ‘forward guidance’ in London.

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Source: CoinDesk

All its research is available here.

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