By Kymberly Martin
NZD
The NZD/USD has traded a 0.8370-0.8430 range over the past 24-hours, returning to trade at 0.8400 currently.
Overnight, the latest global dairy auction took place. The Global Dairy Trade TWI rose 1.1%. This is very much in line with our view of a positive trend in diary prices as we start 2013. It builds on the 2.0% lift we saw in the first auction of the year, a fortnight ago.
Without eliciting a direct immediate response from the currency, the result supports our broader view that trends in NZ commodity prices will help underpin the NZD this year.
The NZD/USD currently trades around 0.8400. Key resistance for the NZD/USD remains at the mid-December highs around 0.8470. Support is eyed at the overnight lows around 0.8370.
The NZD was relatively range-bound on the crosses overnight, in fairly uneventful currency markets. The notable exception however, was the NZD/GBP.
This strengthened on the back of broad GBP weakness. At 0.5260, the NZD/GBP is once again nudging up against key resistance levels. A break above this level would open the way for a return to last February highs around 0.5350.
The NZD/AUD has paddled sideways at the 0.7960 level over the past 24-hours. The key driver of the cross today will be AU labour market data delivered at 1.30pm NZT (see Majors).
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Majors
Currencies traded relatively tight ranges over the past 24-hours. Outliers were a stronger JPY and weak GBP.
Markets remained somewhat directionless overnight. Our risk appetite index (scale 0-100%) remains at a healthy 83% level. However, equity markets were flat on the day.
Data on either side of the Atlantic provided little direction for markets, mostly coming in line with expectation. But overhanging US debt ceiling negotiations kept markets in check. The USD index traded a fairly tight path around 79.80.
The EUR/USD showed some choppiness in trading overnight. It briefly traded above 1.3320 after data showed Eurozone core CPI ticked up to 1.5% in December (1.4% previously). This proved short-lived however and the EUR/USD has pulled back to around 1.3280.
The bounce in the JPY continued yesterday. Its rapid fall in previous months was driven by expectation of future aggressive easing action from the Bank of Japan.
The market now appears paused while it waits for evidence. The USD/JPY has slipped from 88.90 to 88.50, touching below 88.00 intra-night.
The GBP/USD continued its recent fall overnight taking out stops to sit around 1.5980 currently. A break lower from here would open the way for a fall back toward 1.5800.
The AUD/USD treaded water over the past 24-hours ahead of the key data release for the currency today.
AU December employment data will be delivered at 1.30pm (NZT). Our NAB colleagues look for a 5K fall in jobs, based on recent poor employment readings in the NAB survey and weak Job Vacancies data.
This suggests the unemployment rate will rise to 5.4% from 5.2% previously. Given current nervousness regarding the AU domestic economy the market will be in no mood to absorb any negative surprises. The AUD would take the initial impact.
Tonight, US housing starts data are delivered along with the release of the Philadelphia Fed survey. Tonight, the Fed’s Lockhart is scheduled to speak. Although considered a dove, Lockhart is a non-voting member in 2013, so any comments will have less impact on markets.
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