NZD consolidates above 0.7200 USD, but down against JPY, EUR and GBP; USD-TWI down 0.4% despite strong US data, as speculative positioning already long; AUD fails to break past 0.7700 USD and is also weaker against the NZD at 1.0650

By Jason Wong

Strong US data haven’t driven the USD higher.  On the contrary, the USD major currency TWI is about 0.4% lower.  With speculative positioning already long and now somewhat stale, another trigger is required to drive the USD back to its prior upward trend.  A decent-sized and credible fiscal package announced by Trump in 2-3 weeks could do the trick, but traders are also wary of Trump’s capacity to try and talk the USD down as he seeks a “level playing field” with China and Japan.

Against a soft USD, the NZD has managed to hold its ground and it has traded above the 0.72 mark throughout the past 24 hours and currently sits at 0.7225. It is slightly higher against the AUD, which has failed to push on after breaching 0.77 yesterday and it currently sits just under that level.  NZD/AUD is up to 0.9390. 

The NZD is lower on the other key crosses, as the commodity currencies have tended to underperform alongside the USD.  So NZD/JPY is back below 82, NZD/EUR is back below 0.68 and NZD/GBP is back below 0.58.

Trading is expected to be quiet as the week draws to a close.  NZ Q4 retail sales data should be robust, but even if they disappoint the timelier electronic card transactions data earlier in the week showed that spending got off to a very strong start in 2017.  Offshore releases are sparse with UK retail sales data the only one worth a mention.


 

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