After a breather earlier this week, the USD has pushed up again rising by 0.5% on the various indices we monitor.
While you'll see reports of the USD reaching decade-plus highs, those indices reflect a high weighting given to the euro. Our real-time major currency TWI is still trading below the mid-January high, but it is now less than 1% below that peak.
US economic data on consumer sentiment and durable goods orders were better than expected, but thin trading conditions in the holiday-shortened week have likely exacerbated the move higher in the USD.
JPY has been the worst performer, with USD/JPY almost reaching the 113 handle and it currently sits up 1.2% at 112.50.
A chunky global bond market sell-off means that the BoJ will have to be move active in maintaining its current 0% 10-year JGB target. The BoJ's “yield curve control” policy couldn't have come at a better time, as the weaker yen is going much of the work as global bond markets sell off.
The NZD broke below 0.70 this morning, but there is strong support around 0.6950-0.7000 and there has been no follow-through. It currently sits around 0.7010, a couple of percent below our short-term fair value estimate.
The AUD has performed relatively better and is down only slightly against the USD and is finding some support just below the 0.74 mark. Iron ore prices rose by almost 7% on the Dalian exchange yesterday, providing some support to the AUD. This sees NZD/AUD probing below the 0.95 handle, and it has been a pretty steadily decline from the 0.96 peak just a day and a half ago.
EUR is down 0.6% to 1.0560. GBP is the only major currency to show a gain against the USD.
The UK Chancellor outlined his Autumn Statement to Parliament and it was a sobering account, with GDP forecasts slashed and higher deficit and debt levels projected in a post-Brexit world. We can only assume that the stronger GBP reflects market positioning than a reaction to this news.
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