USD loses positive bias on Fed minutes; spikey movements in NZD following employment data

By Jason Wong

Markets were quiet overnight as they awaited the FOMC minutes delivered at 6am this morning. 

Ahead of the minutes, the USD had a positive bias, recovering some losses from the previous session – the mildly hawkish comments by the Fed’s Dudley and Lockhart, mentioned in yesterday’s daily, gave a bid tone to the USD.

Following the release of the FOMC minutes, the USD has lost ground. There appeared to be enough dovish comments in the minutes to suggest that Fed tightening was not imminent.

Indeed, members generally agreed that it was prudent to await more data before making a decision to tighten policy.

The NZD has seen a wide range over the past 24 hours, a result of some ‘spikey’ movements after the release of NZ’s HLFS data yesterday (up to circa 0.7320) and the FOMC minutes (down to circa 0.7204).

Overall, we’ve seen a downward bias in NZD due to USD strength ahead of the FOMC minutes, and a recovery since that release. The NZD currently sits around 0.7240 at present, lower on the day by about 0.5% overall.

Other currencies showed a similar profile, weaker heading into the release of the FOMC minutes and a recovery thereafter. The AUD sits around 0.7650. 

NZD/AUD spiked up to just over the 0.95 mark post-HLFS, but apart from that has been in a fairly tight range and sits at 0.9470 this morning.

Amidst a stronger USD pre-FOMC minutes, GBP showed some resilience, after labour market data showed a fall in jobless claims, rather than a rise the market expected.

That said it is far too early to suggest that Brexit isn’t having an impact on the labour market, given lags between actual job losses and unemployment claims. GBP reached as high as 1.3086 this morning, but has since slipped down to 1.3035.

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