By Kymberly Martin
The NZD and AUD were the strongest performers on Friday, while the CAD was the weakest. European currencies generally made modest gains against the USD.
The S&P500 pushed up a further 0.40%, to a record high of 2213, on Friday. Gains were led by ‘interest rate sensitive’ sectors such as Utilities, as US bond yields declined along with the oil price. In this context, it was unsurprising to see Energy companies declining, despite the general upward momentum in the equity market into weekend.
Meanwhile upward momentum in the USD has stalled. However, our broad USD index remains more than 4% above its pre-US election levels. Although we have US non-farm payrolls due on Friday, the focus will likely fall elsewhere this week (the payrolls numbers would have to be chronically weak to dissuade the Fed from hiking on 14 December).
OPEC’s meeting on Wednesday and the Italian referendum and Austrian presidential elections (both on Sunday) are likely to be the big market drivers over the next week or two.
The latter have potential to usher in further global political uncertainty. If the Italian Government loses the referendum, PM Renzi would resign and we would enter a new period of Italian political instability. In Austria, if the Freedom Party’s candidate Hofer becomes President, it would be a symbolic win for the right wing, anti-Eurozone agenda in Europe. Ahead of this, the EUR/USD ended last week at 1.0590.
The AUD and NZD both traded a bit higher on Friday night, though ending the week a little below intra-night highs. The NZD/USD closed at 0.7040. We still think a modest recovery can ensue by year-end, due to positive seasonal factors. But this will be contingent on the USD consolidating around current levels, rather than pushing higher.
The NZD/AUD closed for the week at 0.9470. We continue to see the cross trading in a range around the mid-90s in the months ahead. The 200-day moving average, at 0.9356 will likely provide near-term support to the downside. Resistance will be encountered on any move back up to 0.9600.
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.