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China's economic growth balanced on a knife edge; Eurozone PMI data a blow to hopes of a recovery into year-end; conflicting US data sees USD spike, slump, then recover

Currencies
China's economic growth balanced on a knife edge; Eurozone PMI data a blow to hopes of a recovery into year-end; conflicting US data sees USD spike, slump, then recover

By Kymberly Martin

NZ Dollar

The NZD/USD trades at a similar level to yesterday morning, around 0.7860.

Despite inspiring a bit of immediate volatility, the release of the US Federal Reserve Minutes proved to be a bit of a non-event yesterday morning. Most currencies including the NZD/USD quickly returned to trade at earlier levels. A quiet day of trading then ensued for the NZD/USD.

Yesterday’s NZ producer price data showed deflation (outputs -1.1%q/q; inputs -1.5%q/q). These were driven lower by dairy and forestry prices as well as lower energy prices.

But not all prices are falling, as shown by the capital goods price index released at the same time. Construction costs continue to demonstrate genuine inflation and signs of acceleration. All plenty for the RBNZ to mull over.

But aside from a brief dip lower last evening the NZD/USD has traded a fairly tight range since yesterday morning, to sit just above 0.7860 at present. Trading on the crosses has also been without significant note.

There is not too much on the domestic or offshore agenda to drive the currency today. NZ credit card spending data is the only item on the domestic data calendar. NZD/USD support is eyed at the intra-night lows just above 0.7800. Resistance is eyed at 0.7910.

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Majors

There were plenty of data-related gyrations in currencies overnight, but with most returning to trade at early evening levels.

Yesterday afternoon’s China HSBC PMI clung on at the 50 level (50.2 expected) that delineates expansion from contraction. The slight disappointment elicited a brief dip in the AUD/USD, but it has subsequently rebounded from intra-night lows to trade at 0.8610 currently.

Later in the evening Eurozone PMI data was released. The fall in the November reading for the composite PMI, to 51.4 (52.3 expected), was a blow to hopes of a recovery into year-end.

However, the EUR/USD initially surged higher on the release of France’s PMI subcomponents that showed improvement on the previous month. But it subsequently fell sharply as the release of German subcomponents showed a decline from the previous month. The EUR/USD has returned to trade at 1.230 this morning.

The GBP was boosted overnight by the release of October UK retail sales data (ex-autos, 0.8%m/m vs. 0.3% expected). The GBP/USD has traded off intra-night lows at 1.5640 to sit around 1.5690 currently.

The USD experienced some volatility around yesterday morning’s Fed Minutes, but it didn’t come to much.

Overnight, the USD also experienced some sharp moves in response to data releases. It spiked higher after the release of October US core CPI (1.8%y/y vs. 1.7% expected). It then slumped on a disappointing US Nov PMI reading (54.7 vs. 56.3 expected). It subsequently recovered from intra-night lows after the release of better than expected US homes sales and Philadelphia Fed survey (40.8 vs. 18.5 expected). The USD index trades around 87.70 this morning.

It looks to be a relatively quiet end to the week. Today AU national accounts are released. Tonight, Canada’s October CPI will be released.

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Source: CoinDesk

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