By Kymberley Martin
NZD
It has been a relatively uneventful 24-hours for the NZD/USD, in the absence of any local data releases. It currently trades at a similar level to yesterday morning, around 0.8220.
The prospects for the NZD were a little brighter relative to the AUD. Sentiment toward the AUD has waned a little in recent sessions.
As a consequence, the cross traded up from 0.7810 yesterday night to around 0.7840 currently.
NZD trading relative to its European peers was somewhat choppy overnight, driven by shifting sentiment toward the EUR. However, both the NZD/GBP and NZD/EUR now trade at similar levels to yesterday morning. The NZD/EUR touched above 0.6180 overnight, before returning to trade above 0.6160 currently.
There are no local data releases today. This evening, Fed chairman Bernanke speaks, though US data releases are relatively second tier.
As a result, we continue to believe the familiar 0.8145-0.8265 range should contain the NZD/USD for now.
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Majors
After a bit of a shaky start to the night, the USD strengthened relative to most of its peers, though trading ranges were generally not large. The USD index currently trades just over 79.00.
Risk appetite eased a little lower overnight, with our risk appetite indicator (scale 1-100%) back at 68%. It peaked around 72% in mid-March. European equity markets failed to hold onto early gains, with the Euro Stoxx50 closing down 0.59%. The S&P500 is currently flat.
Early in the night, European markets appeared to be buoyed by circulating comments of expanding the European “firewall”, and reinforcement of the ESM. The EUR/USD touched highs above 1.3380 before drifting off later this morning to trade around 1.3330 currently. Early this morning, recent concerns regarding Spain’s outlook were not helped when it published a ytd budget deficit of €20.67b.
Meanwhile, the USD was underpinned by the broad easing in risk appetite. Demand for the “safe haven” currency was solid after a disappointing US Richmond Fed Manufacturing index release for March (7 vs. 18 expected). The USD index crept up from intra-nights lows, below 78.80 to trade above 79.00 currently.
The USD made modest gains relative to the JPY and the more “risk sensitive currencies”, such as the AUD and CAD. Recent sentiment toward the AUD has been coloured by commentary from RBA officials regarding the AUD strength and its impact on the economy.
Overnight, news of strike action impacting BHP also tainted the AUD. The latter helped to curb the AUD/USD above 1.0550 last evening. It had initially started in good heart, ahead of broader demand for the USD. The AUD/USD subsequently traded down to 1.0480, where it currently sits.
Today’s focus for the AUD will be the RBA’s release of its Semi Annual Financial Stability Review. It will provide an update on the financial viability of the banking sector, recent trends in household debt and the state of household and corporate balance sheets, plus an overview of general macroeconomic risks.
This evening, US Fed chairman will give another speech, while US durable goods orders and mortgage applications data will be released. Also keep an eye out for European bond auctions in the next couple of days ahead of the Euro Finance Minister’s meeting on Friday.
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