By Kymberly Martin
The USD has weakened overnight, allowing gains from many of its peers. Unusually the GBP has led gains while the JPY is a little weaker.
Whilst WTI oil price futures fell almost 7% at the open yesterday morning, following the weekend’s disappointment in Doha, they have subsequently inched higher. Prices are now only 1.7% below Friday night’s close. This has allowed oil-linked currencies, such as the CAD, to reclaim much of yesterday morning’s losses. The CAD/USD now trade at a similar level to where it closed last week, around 1.2810.
Similarly, the AUD has climbed steadily following yesterday morning’s plunge. The AUD/USD now trades at 0.7740, above its level at Friday’s close.
Today the RBA’s April Minutes will be released. However, we believe these have largely been superseded by the very positive run of data reports in recent days. These include the strong NAB business survey, decline in unemployment rate and tick-up in inflation expectations. Nevertheless, comments around the currency will be watched for, given the Governor’s post meeting statement that “an appreciating exchange rate could complicate the adjustment under way in the economy”.
The GBP/USD has pushed off early-evening lows, in the backdrop of a weaker USD. It finds itself in the unfamiliar position of being one of the strongest performing majors overnight. From evening lows below 1.4140 the GBP/USD now trades at 1.4280.
The NZD has been on a steady ascent since early yesterday morning. From evening lows near 0.6890 it now trades above 0.6940. Resistance is eyed at the late-March highs around 0.6970. This morning’s PSI is unlikely to be a market mover. It was 56.9 in February. As long as it remains mid-50s it will be consistent with our still-conservative views around GDP growth for the first half of 2016.
Of greater relevance for the currency may be the latest GDT dairy auction in the early hours of tomorrow morning. While global commodity prices continue to grapple their way off early-2016 lows, we are not expecting the dairy price to catch much, if any, of this updraft. A modestly positive result might be the best we can hope for.
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Kymberly Martin is on the BNZ Research team. All its research is available here.
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