By Kymberly Martin
NZD
The NZD/USD traded a quiet range over the past 24-hours, sitting around 0.8150 currently.
There was little to drive market direction as market activity remained light during the US Thanksgiving holiday. Generally sentiment was fairly stable, assisted by the benign China PMI reading (see Majors).
The release also briefly provided a boost to the AUD and NZD, but proved short-lived. There are no local data releases today and market trading will likely remain subdued as many extend Thursday’s US holiday into the weekend.
With the NZD/USD currently sitting at 0.8150 we see resistance at 0.8180. Key support continues to be eyed at 0.8080.
On the crosses, the NZD held its own relative to the AUD and the stabilising JPY. It lost a little ground relative to a broadly stronger EUR.
The NZD/EUR currently sits just below 0.6340, close to the middle of the 0.6230 to 0.6470 range it has traded for the past few months.
Key for this cross tonight will be the release of German GDP and November IFO business confidence data. Consensus expects IFO current and expectations readings to slip slightly from their October readings.
This represents ‘the core’ of Europe battles to contain the impact of troubles at the periphery. If the data were to come in below these already modest expectations expect the NZD/EUR to benefit.
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Majors
It has been a relatively uneventful 24-hours in currency markets, as the US enjoys its Thanksgiving holiday. The EUR outperformed a fairly range-bound USD.
Market sentiment was generally underpinned by a benign Chinese HSBC Manufacturing PMI outcome. The index managed to claw its way back into expansion at 50.4.
By contrast, European PMI measures remained in contraction (including those for France and Germany) but avoided deteriorating further. European equity markets eked out a further 0.60% gain as US markets remained closed.
Markets seemed unfazed by the unpromising start to the European 7-year budget negotiations. As UK P.M entered the negotiations he was quoted saying “I’m not happy at all..It is quite wrong for there to be proposals for this increased extra spending in the EU”. Expect protracted negotiations.
In this backdrop the USD traded sideways around 80.80, and the EUR/USD climbed a little from 1.2830 to sit close to 1.2860 currently.
The recent relentless weakening of the JPY lost momentum last night. The USD/JPY consolidated around the 82.50 level.
The AUD/USD bolted higher in knee-jerk response to the pick-up in the China PMI. However, it quickly found resistance at the familiar 1.0400 level.
Dipping below 1.0360 overnight the AUD/USD has returned to trade at 1.0380. The currency remains well within its recent range. Near-term resistance is seen at 1.0420 and support around 1.0350.
The Chinese MNI flash business sentiment indicator for November released this afternoon may further inform views on China.
Otherwise it is likely be a fairly quiet day in markets ahead. There are no local data releases. Japan is enjoying a holiday, and activity is the US is likely to remain muted as many extend their Thanksgiving holiday into the weekend.
The German IFO survey of business conditions is the main data release tonight along with the final reading of German GDP. Both will add more colour to the state of ‘core’ Europe, which is clearly no longer immune from the woes of the periphery.
Event Calendar:
23 November: EU German IFO.
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