By Kymberly Martin
NZD
The NZD has traded lower in a slightly choppy pattern overnight, to sit just below 0.8010 at present.
Overnight, the USD was broadly stronger on the back of solid US data releases and some signs of economic resilience in the US Fed’s Beige Book.
The NZD/USD now sits at its overnight lows just below 0.8010. Immediate support is now seen at the 0.7990 level, with a break of this level opening the way to support at 0.7930.
The NZD continues to under-perform on the crosses also. The NZD/GBP slipped a little further to below 0.5060. Despite this, as outlined in our note yesterday (NZD/GBP: Peak on the (Distant?) Horizon) we see the NZD/GBP fairly well supported over the next 3 to 6 months.
Indeed, we see the risks skewed toward the cross pushing back to new post-float highs, before a gradual downtrend then ensues.
In a bit of a roller-coaster ride overnight the NZD/EUR has slipped a little further to trade just above 0.6390. The era of headline watching for the EUR has likely returned as we lead up to next week’s ECB meeting.
Today’s key local data release will be the NBNZ business confidence survey. The survey steadied surprisingly nicely in July, with net confidence at +15 and own-activity expectations at +24. That was consistent with GDP growth of around trend and, thus, our macro forecasts too.
We don’t anticipate any major deviations in today’s survey for August. Still, a sharp fall in the survey would likely prompt the most reaction from the NZD, as markets would ratchet up expectations of RBNZ rate cuts.
------------------------------------------------------------------------------------------------------------------------------------------
To subscribe to our free daily Currency Rate Sheet and News email, enter your email address here.
------------------------------------------------------------------------------------------------------------------------------------------
Majors
Currencies were contained within relatively tight trading patterns overnight. The USD strengthened.
The market backdrop was relatively benign overnight. The S&P500 is currently up 0.20% while the Euro Stoxx 50 posted a modest 0.30% decline. Our risk appetite index (scale 0-100%) continues to sit at a fairly healthy 66%.
Data confirmed US Q2 GDP at 1.7%. US pending home sales were strong for July (2.4% vs. 1.0%m/m expected). The release of the Fed’s Beige book showed the US economy continued to expand “gradually” assisted by improving housing and retail sales trends.
The FOMC will weigh this assessment against the need for further policy accommodation to help bring down the unemployment rate that is stuck above 8%.
The market will be looking for further hints of the Fed’s assessment when Bernanke speaks at Jackson Hole on Friday. In the meantime, the USD index has been on a gradual uptrend overnight, moving up from around 81.40 to sit around 81.55.
European headlines have started to pick up again in the lead-up to next Thursday’s ECB meeting. Europe will also be under the spotlight again tonight with the release of German employment data, European confidence indicators, and an Italian bond auction. For now, the EUR/USD has been declining overnight on the back of US strength, to sit around 1.2530 at present.
The AUD/USD continues to consolidate just above the 1.0350 level. AU building approvals data will be released today. Unless they provide a major surprise they are unlikely to meaningfully impact on the AUD. The broader driver of the currency will remain general risk appetite, driven by European headlines and anticipation of this Friday’s Jackson Hole meeting.
Event Calendar: 30 August:NZ building permits; NZ NBNZ business confidence; JN retail trade; AU Capex; AU building approvals; GE unemployment; US personal income & jobless claims; 31 August: JN CPI & jobless rate; EU CPI; ECB’s Coeure & Nowotny speak; US Fed’s Bernanke speaks at Jackson Hole Economic Symposium.
No chart with that title exists.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.