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Currency traders mark down the NZD on a new RBNZ focus on investor loans for housing, mark down the AUD on RBA comments, and await US data

Currencies
Currency traders mark down the NZD on a new RBNZ focus on investor loans for housing, mark down the AUD on RBA comments, and await US data

By Kymberly Martin

The NZD has fallen heavily against a broadly stronger USD overnight.

The AUD has also struggled.

It was a fairly volatile night for most currencies, led by choppy movements in the EUR/USD around the ECB’s announcement.

Sounding cautiously optimistic, the ECB left rates unchanged as expected and confirmed asset purchases would begin Monday. The EUR/USD initially spiked above 1.1100 before slumping back to 1.100 currently. This is a new low since Sept-2003.

The USD index was a beneficiary of weakness in European currencies. This also saw the USD/JPY push higher to trade at 120.20 this morning.

The AUD/USD experienced a brief spike higher yesterday afternoon on comments from RBA’s Lowe at a global macroeconomics conference. He was quoted as saying the AUD was closer to fair value than in the past couple of years. But the AUD soon fell back to earth after the comments were clarified by stating the currency is still too high given the state of the economy. Overnight, the AUD has slumped from 0.7820 to 0.7760 currently.

NZD/USD has the dubious honour of being the worst performing currency, by some margin, over the past 24-hours. It has declined almost 1.7% against the USD.

The descent set in yesterday afternoon after the RBNZ released a consultation document on property investor loans.

The market presumably sees action toward controlling the bubbling NZ housing market as opening up greater prospects for RBNZ rate cuts. The NZD/USD then endured steady losses overnight in the backdrop of a stronger USD. The NZD/USD trades at its night’s lows of 0.7460, currently. Support is now eyed just above 0.7400.

The NZD was weaker on all the crosses, even against a soft EUR. Notably the NZD/AUD has plunged from early afternoon highs above 0.9720 to trade at 0.9620.

Today, only NZ wholesale trade data is due domestically.

However, the fate of the NZD along with most other currencies will lie with the release of the US payrolls report tonight.

Although the headline non-farm payrolls number will gain initial attention, more important will likely be the average hourly earnings data. An above-consensus release would be most likely to result in a stronger USD, as the market steps forward its expectations for the first Fed rate hike.

We continue to see this occurring mid-year, slightly before the market is currently pricing.

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