by Kymberly Martin
NZD
The NZD has been fairly range-bound, currently trading around 0.8140.
During the ANZAC day holiday, the NZD/USD kept itself relatively contained within a 0.8110 to 0.8150 range.
Early this morning, the US Federal Reserve announcement saw the USD weaken broadly. The NZD/USD consequently moved up from just above 0.8110 to trade around 0.8140 currently.
Whilst the NZD/EUR showed rangy trading overnight, the NZD/GBP took its direction from UK data releases. Key to these was data that showed the UK recorded negative GDP growth in Q1. The GBP plunged on the release, catapulting the NZD/GBP from around 0.5020 to above 0.5060. However, this cross was unable to hold onto the gain, drifting back to just above 0.5030 this morning.
The NZD/AUD has drifted gently lower over the past 24-hours. It is now trading someway below the level it surged to earlier in the week after the low-side reading on AU 1Q CPI. The NZD/AUD currently sits just above 0.7860.
The key for the cross in the weak ahead will be today’s RBNZ rate announcement followed by the RBA announcement next Tuesday.
Whilst we expect the RBNZ to remain “on hold” we expect the RBA to cut rates by 25bps. These expectations are largely shared by the market. However, key to the RBNZ meeting today will be any comments related to the recent downtick in NZ inflation.
We will also be interested to see if the NZD remains centre stage in the RBNZ statement.
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Majors
Most currencies have been fairly range-bound over the past 24-hours. The USD index weakened after the US Federal Reserve announcement.
The US Fed made a number of tweaks to its forecasts . It made no changes to its current policies, but reiterated that its stands ready to use additional measures if necessary. The USD index slipped from intra-night highs above 79.30 to trade just above 79.00 currently.
The EUR/USD traded choppily overnight, but with little direction, finally getting the upper hand early this morning after the US Fed meeting. It currently trades just below 1.3220.
Market sentiment had stabilised overnight, ahead of the Fed meeting, in the absence of European data releases or any new negative headlines.
Our risk appetite indicator (scale 0-100%) moved up from 60-63%. The Euro Stoxx 50 recorded a 1.70% gain. The S&P500 is currently up 1.30%, also boosted by a stellar earnings announcement from Apple Inc.
The GBP/USD gapped lower last evening after data showed the UK recorded negative growth in Q1 (-0.2%q/q vs. 0.1% expected), confirming the UK was in technical recession. Falling from 1.6140, it found support at 1.6080 before clawing its way back up to 1.6170 this morning.
This evening, Eurozone consumer confidence will be released along with the Eurozone business climate indicator. Initial jobless claims and pending home sales data will be released in the US.
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