By Kymberly Martin
Most currencies have traded fairly contained ranges over the past 24-hours, though the USD has pushed a little higher in the early hours of this morning. The JPY has weakened further.
The USD index pushed a little higher in the early hours of this morning as Fed Chair Yellen gave testimony to Congress. She seemed wary of being drawn into premature discussions of the economic outlook under the new President-elect. Rather her comments were fairly text book.
Notably, she also did not make any comments about the recent tightening in monetary conditions due to the surging USD. This appeared to give the green light for the USD index to push a bit higher, surpassing yesterday’s brief foray above 100.50. The USD index now sits at 100.70.
The EUR/USD was a direct casualty. From early morning highs above 1.0740, it traded down to 1.0640 currently. In the coming 24-hours there are various Eurozone figures scheduled to speak, including ECB President Draghi and Bundesbank’s Weidmann.
Late last evening the GBP/USD enjoyed a short surge higher after the release of UK October retail sales data that was much stronger than expected. In fact ex-autos, sales grew at 7.6% compared to a year ago. However, the GBP/USD succumbed to the strong USD in the early hours of this morning and now trades back at 1.2430.
The AUD experienced a short burst of volatility after the release of the AU employment report yesterday. It has drifted lower overnight, and is currently probing below support at the September lows near 0.7440.
The NZD/USD has also traded a little lower in the early hours of this morning, currently a little below the 0.7040 level that arrested its declined yesterday morning. The 200-day moving average sits tantalisingly near, at 0.7025.
Today, look out for a scheduled business update from Fonterra. This is an opportunity for the dairy cooperative to revise its current 2016/17 milk price forecast of NZD5.25. If it does update its forecast it is likely to be substantially higher. Our current forecast for this season is NZD6.00, although current international pricing and currency levels suggest the season's milk price might well be higher than that. Any upgrade might help support the NZD/USD, though the USD is more firmly in the driving seat at present.
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