USD strength remains the dominant theme this week, as Fed hike expectations for December solidify. Most major currencies have fallen against the USD, except for JPY, which has strengthened.
Various USD indices are up in the order of 0.6-0.8%. Higher oil prices earlier this week and increased likelihood of a Clinton Presidential victory have driven up US rates and the USD.
After yesterday’s gains, oil prices have come off the boil. Reuters reported that Russia’s biggest producer Roseneft said it won’t cut output, following President Putin’s tease yesterday that Russia was open to join OPEC in cutting production levels or freezing output.
GBP is the weakest of the majors we closely follow, in freefall from the early hours this morning, down 2% and pushing below 1.21 this morning. While reasons for GBP weakness are well known, it might have got an added boost when two separate Bank of England FPC and MPC members, giving testimony to lawmakers, noted further downside risk to the pound. As noted earlier this week, our year-end target for next year is 1.16, but there’s always the chance of reaching that level sooner than expected. Indeed, it surpassed that nadir during Friday’s flash crash.
The NZD is trading at a level not seen since late July, down over 1% to 0.7050. July’s low of 0.6950 is the next technical support level. Apart from USD strength, the NZD was helped lower by the RBNZ’s Dermott yesterday afternoon, when he repeated the refrain that further policy easing “will” be required.
NZD/AUD has oscillated in a fairly tight 0.9345-0.9385 range and currently sits at 0.9360. EUR has fallen to a 2-month low and is trading close to its low for day, around 1.1050. JPY is the only major currency to defy USD strength, perhaps a reflection of the risk-off move, with the VIX up 18% and the S&P500 currently down 1.2%. USD/JPY is down 0.4% to 103.20.
Get our daily currency email by signing up here:
Daily exchange rates
Select chart tabs
BNZ Markets research is available here.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.