By Kymberley Martin
NZD
The NZD/USD fell after a relatively dovish RBNZ announcement yesterday. However, it soon recovered in the backdrop of robust global risk appetite. It tested 0.8280 level last night, before returning to trade at 0.8250.
The RBNZ left rates at 2.50% yesterday. Of its front page statement, about a third was dedicated to comments about the recent strength of the NZD.
The NZD/USD fell sharply after the announcement, soon finding support at the 0.8140 level. As global risk appetite improved overnight it moved higher, currently trading at 0.8250.
The NZD made steady gains against the AUD yesterday. It got an initial leg up after the release of a slightly weaker than expected AU employment report. It then continued its ascent overnight to trade just under 0.7760 currently.
The NZD/EUR made steady progress yesterday to touch 0.6260 around midnight, when German industrial production for January was published. This was higher then expected (1.6%m/m sa vs. 1.1% expected). The NZD/EUR then subsided to trade around 0.6220 at present.
NZ electronic card transactions will be released today, though unlikely to be market moving.
The market also awaits the final announcement on the Greek PSI deal that may allow the “risk on” mood to run a little further. Today, resistance for the NZD/USD is seen at 0.8280 and support at 0.8140.
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Majors
As the market anticipated a successful Greek debt swap deal today, risk appetite improved. Appeal for the “safe haven” faded and the USD declined all its peers except the JPY over the past 24-hours.
Our risk appetite (scale 1-100%) has moved up further from mid week lows around 52% to 61% currently. The market was buoyed by optimism that a successful Greek debt swap is imminent. Headlines suggest the critical 75% uptake level of the deal may have been surpassed. The Euro Stoxx 50 closed up 2.20% and the S&P500 is currently up 0.90%. In this backdrop the “safe haven” USD index lost its lustre, drifting off from 79.70 to below 79.20 currently.
By contrast the EUR was on a fairly steady upward path overnight.
The ECB kept rates on hold at 1.00%, as expected. It cut its 2012 GDP forecast to a -0.5% to+0.3% range. President Draghi spoke of the success of the LTRO and of European reforms being enacted via the fiscal compact. He would not be pressed on whether there would be further LTRO auctions. The EUR/USD traded up from 1.3180 last evening to 1.3260 currently.
The GBP also moved higher overnight in choppy trading. The BoE also left rates unchanged at 0.50% and its asset purchase target at £325b. The GBP/USD traded up from 1.5740 to 1.5820 currently.
The JPY was the only major currency to under-perform the USD over the past 24-hours. It started yesterday on the back foot after the final release of Japanese Q4 GDP, that came in at -0.7%ann. (-0.6% expected). It continued to decline overnight as risk sentiment improved, reducing its appeal as a “safe haven” currency. The USD/JPY moved from 81.10 yesterday morning to 81.50 currently.
The AUD/USD fell yesterday after data showed the unemployment rate tick up to 5.2% in February from 5.1% previously (in line with market forecasts) However, employment fell by 15,400, worse than the median forecast of a 5K rise. The participation rate fell to 65.2%, from 65.3%. Later however, the AUD got swept along by the general pick up in risk appetite. It rose from 1.0560 yesterday afternoon to above 1.0630 currently. The performance of both the NZD and AUD yesterday suggest the dominant driver of these currencies at present is global risk appetite, as opposed to specific local data.
Today, the Chinese data releases (industrial production, CPI fixed asset investment, retail sales) could create some volatility for the AUD. Tonight we get UK industrial production data. Most importantly, the US non-farm payroll data are published. A strong outcome (210k expected) would extend the current improvement in risk appetite.
Also keep an eye out for the final announcement on the Greek PSI deal.
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2 Comments
While on the ground in Greece this is happening, the State is winning.
Jacob March 8, 2012 at 6:07 pm
As I live in Greece I can tell you that what is happening here is insane.
The economy choked by taxation.
For many people, their tax bill is above their total income. Fuel is now €1.80 (~$9 USD per gallon). VAT gone to 23%, Road Tax for a big car can be as much as €1700, Property taxes are 2 average monthly salaries. Healthy Business are refused loans and go bust. National insurance for many has doubled, and every 2-3 months there is an “emergency tax bill” usually a whole average salary. Business are taxes 80% of *next* year’s tax bill
All these are causing a MAJOR recession. No one is investing anything as they can hardly buy the essentials (milk and bread), consumption has declined, car sales are 1/8th of some years ago, properties stay vacant..
The EU/ECB/IMF programme is just insane, it is not addressing at all the real problems, a bloated and inefficient public sector, useless public services, but they are attacking the private sector in every possible way.
It will end-up in tears. Argentina is the good scenario. The bad scenario is Libya with Politicians lynched on the streets. Tar and Feathers are coming
New data released today show that more 16-24 year old Greeks are now unemployed than employed. This stark fact makes a nonsense of the Troika’s EU austerity programme.
In addition to Andrew’s article: Like in so many cases the taxpayer bears the burden.
http://www.voxeu.org/index.php?q=node/6804
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