sign up log in
Want to go ad-free? Find out how, here.

Market ponders RBA rate cut scenarios; assessment of Australian growth and inflation looking like New Zealand's; Euro gaps higher on positive PMI

Currencies
Market ponders RBA rate cut scenarios; assessment of Australian growth and inflation looking like New Zealand's; Euro gaps higher on positive PMI

By Kymberly Martin

The USD was broadly weaker overnight. The NZD/USD again has its nose above 0.7000.

Overnight, while WTI oil price futures declined 2.7%, equities were able to keep their head above water. The S&P500 is currently up 0.6%, led by consumer-related companies. Our risk appetite index (scale 0-100%) is hovering just below 50%.

The EUR/USD was trading steadily higher from early in the evening. The release of the final reading of the Eurozone manufacturing PMI (51.7) provided no impediment to this upward momentum. The EUR/USD then enjoyed a gap higher through the 1.1500 level, to now trade at 1.1520. This is its highest level since a brief spike higher in August last year.

The GBP/USD also enjoyed a bit of a break higher overnight. It now trades at 1.4660, its highest level since early-January. The release of the UK PMI will be the local test for the GBP tonight.

The AUD has regained some composure at the start of the week, ahead of today’s RBA meeting. It experienced a bit of a hill climb overnight, but now trades near intra-night highs of 0.7660.

Yesterday’s NAB Business Survey continues to point to a very favourable business environment for Australian firms, despite giving back some of the strong gains witnessed in last month’s survey.

Service industries have persistently been the best performers. However, subdued inflation pressures in the Survey and last week’s soft Q1 CPI print suggest the RBA has scope to cut today. These assessments of the growth and inflation are beginning to very much rhyme with the outlook for NZ. A cut by the RBA today would no doubt result in a knee-jerk fall in the AUD/USD, given it is only 50% priced by the market.

Equally, a cut today would likely take some toll on the NZD/USD, as the market further ponders the prospect of a June RBNZ rate cut. However, the NZD/AUD cross would likely benefit.

The scheduled GDT dairy auction in the early hours of tomorrow morning will likely also be a key determinant of the fate of the NZD in the coming 24-hours. We are hopeful that the auction may continue the recent theme of modest improvement.


Get our daily currency email by signing up here:

Email:  

Daily exchange rates

Select chart tabs

Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
End of day UTC
Source: CoinDesk

Kymberly Martin is on the BNZ Research team. All its 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.