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AUD/USD at lowest level since mid-March; commodity-linked currencies the big losers; USD pushed around by mixed data; NZD/USD losing some of the recent upward momentum

Currencies
AUD/USD at lowest level since mid-March; commodity-linked currencies the big losers; USD pushed around by mixed data; NZD/USD losing some of the recent upward momentum

By Kymberly Martin

Most currencies have declined relative to the USD over the past 24-hours. The NZD was amongst the weaker performers, although declines were led by the CAD.

Risk appetite remained relatively muted overnight. Equities declined on either side of the Atlantic while credit spreads pushed wider.

The global oil price attempted a rally but fell sharply back to earth in the early hours of this morning. The WTI oil price is now down 0.7%, dragging the ‘oil-linked’ CAD along with it. The USD/CAD has traded up from 1.2700 to 1.2870.

The USD index has traded marginally higher overnight. It touched early morning lows after the release of a disappointing US ADP employment report. However, it subsequently gained a small boost from a stronger-than-expected US ISM non-manufacturing survey.

Whilst European currencies were generally a bit weaker versus the USD it was the ‘commodity-linked’ currencies that were the worst performers.

The AUD/USD has limped a little lower, after its dramatic cliff-fall yesterday. It now trades at 0.7460, its lowest level since mid-March.

The NZD/USD has also drifted lower. From early morning highs around 0.6920, it now trades at 0.6870.

The uptrend in the NZD/USD, in place since mid-January, does not yet appear to be broken.

However, as we move through the year and the RBNZ delivers further cut(s), and the Fed inches the Fed funds rates higher, we continue to see the NZD/USD losing its current upward momentum. Near-term resistance is eyes at 0.7050, while support will likely be encountered on any pull-back toward 0.6800.


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Kymberly Martin is on the BNZ Research team. All its research is available here.

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1 Comments

However, as we move through the year and the RBNZ delivers further cut(s), and the Fed inches the Fed funds rates higher, we continue to see the NZD/USD losing its current upward momentum.

While the USD was saved momentarily after a Fed chatter box was wheeled out to save anything, material progress in the economic affairs of the United States do not warrant a rate hike.

Overall for Q1, exports declined 7% which is slightly better than the recent average at the end of 2015. Imports dropped 4.9%, almost right in line with recent averages, though that figure is boosted a little by petroleum. Global weakness starts in the US economy... Read more

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