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German business confidence sentiment shifts lower; excrutiating Greek negotiations continue; NZD finds support and firms against majors

Currencies
German business confidence sentiment shifts lower; excrutiating Greek negotiations continue; NZD finds support and firms against majors

By Kymberly Martin

The NZD/USD has outperformed, and rebounded to trade at 0.6890 this morning.

A sense of lethargy appeared to be hanging over markets overnight, as excruciating Greek negotiations limped on.

Early-week optimism that a deal might be within sight faded. Most markets traded relatively tight ranges, apparently exhausted by the ongoing saga.

Overall, our global risk appetite index (scale 0-100%) remains at a fairly steady 64%, even as equity markets took a bit of breather overnight. The S&P500 is currently down 0.5%.

The USD has largely consolidated over the past 24-hours, as the third reading of US 1Q GDP provided no surprises.

The USD index trades around 95.20 this morning, only slightly below yesterday morning’s level, but still around 5% below mid-March highs.

The market will likely need to believe that Fed hikes really are imminent in order to revisit those earlier highs. But ultimately we still believe the strong USD story has further to run.

The German IFO survey of business released overnight showed a dip in both current conditions and expectations, in June.

This suggests the Greek crisis may be weighing on sentiment, although overall indicators point to a pick-up in the German economy in 2Q of this year. The EUR/USD has consolidated overnight, just above the 1.1200 level.

The NZD/USD has been one of the stronger performers over the past 24-hours. It dipped toward 0.6850 in the early hours of this morning, but has since rebounded to trade at 0.6890 currently.

Support remains at 0.6820, while resistance is likely to be encountered if the currency attempts to push back above 0.7000.

The NZD has also strengthened on the crosses, notably against the AUD and GBP. NZD/AUD has rebounded from support at 0.8850 that also marked its lows last Nov. It has traded steadily up to 0.8940 currently.

With a lack of data locally today, all eyes will remain on newsflow out of the Eurozone along with some scheduled ECB speeches and a handful of US data releases tonight.


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Kymberly Martin is on the BNZ Research team. All its research is available here.

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