Markets have been uneventful overnight, with only second-tier data releases and traders sitting on their hands, waiting for the Fed’s latest policy Statement in just under 24 hours. The NZD and AUD have been well bid for no obvious reason, while UST yields have drifted up a touch.
President Trump gave his first address to the UN and used the opportunity to single out a few rogue nations. He threatened to “totally destroy” North Korea and repeated that message in a later tweet. These sorts of provocations are now largely ignored by the market.
Equity investors show no real concern about the beginning of the Fed’s “quantitative tightening” programme. The S&P500 is on track to make its third consecutive record close, although the 0.1% gain is hardly significant. The VIX index continues to hover around a risk-loving level of 10.
The NZD and AUD are at the top of the leaderboard, up in the order of 0.7-0.8% for the day. It’s been a steady move higher for the NZD, with traders clearly not bothered by the looming election. The positive risk sentiment backdrop is the greater force at present. NZD is trading close to its highs for the session and sits around the 0.7320 mark. The overnight GDT dairy auction was broadly in line with the flat result expected, with average prices up by less than 1%.
The AUD is also near its highs for the session and sits around 0.8015, with NZD/AUD nudging a touch higher to 0.9135. Yesterday’s RBA minutes didn’t throw up any curveballs, with the RBA satisfied with the slightly better Australian growth picture and happy to keep monetary policy on hold. There was no dialling up of rhetoric about the recent strength in the AUD.
Most other major currencies are up slightly against the USD. EUR is up 0.4% to around the 1.20 mark. Earlier, it had dipped to 1.1950 as Reuters reported that the strong euro was causing a rift among ECB policy makers. These unnamed sources also said that the likelihood was rising that any end-date for purchases might not be set in stone or that part of the decision might be put off until December. The dip in EUR didn’t last for long.
GBP is up a touch to 1.3520, with some intraday volatility as a clear rift is evident between Johnson and May, while USD/JPY is down a touch to 111.50.
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