By Kymberly Martin
The NZD has fallen around 0.25% relative to the USD over the past 24-hours, to around 0.8020 currently. This occurred in one sharp move after the release of a low-side NZ Q4 CPI number.
The NZD/USD bobbed around the 0.8020 level last night, still licking its wounds after its sharp fall, following the low-side release (-0.3% vs. +0.4% expected) of Q4 CPI yesterday morning. NZ interest rates rapidly declined as a result (see Fixed Interest section). The NZD/USD fell from 0.8080 to 0.8020.
The data was soon followed by an upbeat ANZ consumer confidence number. This rose to 116.1 from 108.4 previously, when a gentle subsiding had been expected. However, the currency showed little response to the confidence data still focused on the previous release.
The NZD lost ground relative to a broadly stronger EUR overnight. The EUR was buoyed by European bond auctions showing borrowing costs had fallen substantially from the end of last year. The NZD/EUR slipped from 0.6240 to 0.6200 currently.
The NZD/AUD was chopped around by the NZ CPI release (falling sharply) and AU employment report (spiking higher). In the evening the cross established itself around 0.7720, dipping as low as 0.7690 early this morning, before returning to the 0.7720 level currently.
Near-term, support for the NZD/USD is seen at 0.8000 and resistance at 0.8080.
Majors
There was a general “risk on” tone overnight after solid European bond auctions, some decent US earnings data, and relatively benign US data releases. In this backdrop the USD was broadly weaker, with European currencies benefiting.
Equities rallied 1.90% on the Euro Stox50, led by a whopping 6.25% rise in financials. This came after Spain and France both successfully auctioned bonds in their first sale of medium to long-term debt since their ratings downgrades. France’s 2-year note yielded 1.05% down from 1.58% in October. Spain sold bonds maturing in 2022 at 5.4%, down from 6.98% in November.
The EUR/USD moved up from 1.2860 last evening to 1.2940 currently, also boosted by a relatively relaxed commentary from the ECB in its latest Monthly Outlook.
The USD index conversely slipped from around 80.60 last evening to 80.20 currently. The USD was also overlooked as a “safe haven” as sentiment improved, after Bank of America posted a solid profit and US jobless claims fell to their lowest level in four years. The S&P500 is up 0.50%.
The improvement in sentiment did not, however, result in the usual run up in the NZD and AUD. The NZD was virtually without a heartbeat last night after its fall following yesterday’s CPI release. The AUD/USD displayed choppier trading overnight. However, it failed to regain its losses incurred after the AU employment data yesterday.
News commentary on the data emphasised the “disappointing jobs number”. This focused on the employment change -29.3k (+10k expected) as opposed to the steady unemployment rate 5.2%. The AUD/USD gapped from 1.0430 to 1.0380 before recovering to 1.4000 currently.
There is little on the data front today. UK retail sales and US existing homes sales data will be released tonight. Expect markets to keep a close eye on the US earning reporting season, as a barometer of this relatively resilient component of the US economy.
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