by Kymberly Martin
NZD
The NZD came in for some further badgering at yesterday’s RBNZ meeting. However, it actually rose on the announcement, and has subsequently maintained fairly range-bound trading. The NZD/USD currently sits around 0.8160.
The RBNZ’s more dovish statement failed to dent the NZD, even though the currency’s strength came in for particular mention once again.
In fact the NZD/USD got a boost after the announcement, moving up from 0.8140 to almost 0.8180. Overnight, the NZD/USD showed rangy trading, returning to trade at 0.8160 currently.
On the crosses, the NZD lost a bit of ground overnight. The NZD/EUR eased from above 0.6180 to around 0.6160 currently. The NZD/GBP appears to be finding solid support at the 0.5020 level, curtailing its quite rapid descent since late February.
The fall has largely been driven by a slightly firmer tone from the Bank of England regarding the inflation outlook and reduced prospects for additional quantitative easing. This is despite continued sogginess in UK growth data.
Overnight, the NZD/GBP bounced off solid support to trade just below 0.5040 currently.
The NZD/AUD ambled down from 0.7880 to trade below 0.7850 at present. With the RBNZ meeting now out of the way the key hurdle for the cross will be next Tuesday’s RBA rates announcement. We expect a 25bps cut.
There are no local data releases today. Expect the NZD/USD to trudge along in its now very familiar range. Support is seen at 0.8120 and resistance is eyed toward 0.8190.
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Majors
There was some choppiness in currency markets overnight although the USD was generally weaker.
Overnight market sentiment continued to stabilise with our risk appetite indicator (scale 0-100%) inching up to 65%. The Euro Stoxx 50 closed flat and the S&P500 is currently up 0.70%.
The USD index traded with a general downward bias during the evening, as the stabilisation in market sentiment saw reduced demand for the “safe haven” currency.
In the early hours of this morning, the positive surprise on US pending home sales (4.1%y/y vs. 1.0% expected) saw the USD drop as risk appetite improved further.
The USD index currently trades around 78.90. The EUR and GBP were both fairly range-bound overnight, tossed around by data releases on both sides of the Atlantic.
Eurozone confidence readings for April disappointed expectations (economic confidence fell to 92.8 vs. an expectation for 94.2). The EUR/USD was somewhat weaker after the release, recovering early this morning after the US home sales data. It currently trades around 1.3240.
The AUD/USD was on the ascendancy from late last evening as broad sentiment approved. It moved up to trade just below 1.0400 currently.
The JPY will be in focus today as the Bank of Japan announces its target rate. The market will be looking for indications of further quantitative easing from the Bank, in line with achieving its new, explicit inflation target. The USD/JPY weakened a little overnight from 81.20 to 81.00. The JPY has recovered somewhat from its mid-March lows.
However, it was the surprise announcement of aggressive quantitative easing from the BoJ back in February that started the USD/JPY on its rapid ascent from levels around 77.00.
Tonight, US Q1 GDP data (market expects 2.5%q/q annualised) and University of Michigan consumer confidence are released.
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