By Kymberly Martin
NZD
Along with many of its peers, the NZD/USD has had a fairly quiet start to the week. It has pushed a little higher in the early hours of this morning to sit around 0.8260 currently.
Yesterday’s electronic card transaction data for the retail sector was slightly stronger than consensus expectations at 0.8%m/m.
But the 2nd tier data had little impact on the currency that bobbed around just above the 0.8200 level for most of the day.
Early this morning, the currency attracted some demand in general solid global markets, rising to 0.8260.
The key focus for the currency this week remains Thursday’s RBNZ meeting with full Monetary Policy Statement. In the interim there is little in the way of domestic data releases.
For now, the currency will likely take its cue from general global sentiment. Key support is seen at the overnight lows of 0.8190 and resistance at 0.8350.
On the crosses, the NZD made gains relative to a weak JPY and GBP. On both crosses the NZD now sits close to critical resistance levels that have marked the highs this year.
The NZD/GBP sits at 0.5530 and whether it can push higher near-term will likely be influenced by tonight’s UK data dump (see Majors). The NZD/JPY sits close to its highest level since July 2008 at 79.50.
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Majors
It was a fairly quiet start to the week in currency markets. The NZD was the strongest performer over the past 24-hours and the JPY the weakest.
Our global risk appetite index remained at a very healthy 84%, but equity market struggled to add to recent gains. The Euro Stoxx 50 closed down 0.40% and the S&P500 is up a modest 0.25%.
The USD index held onto most of Friday’s payroll inspired gains. It has bobbed around between 82.60 and 82.80 over the past 24-hours.
The EUR/USD showed very little life for most of the night. Data confirmed the fairly bleak European economic backdrop. Final Q4 Italian GDP data (-2.8%y/y) confirmed the country remains deep in recession.
January manufacturing data for France showed activity contracting 4.5%y/y. However, German data showed the country continued to run a sizable current account surplus (€11.3b) in January. The EUR/USD sits around 1.3030 this morning.
The GBP/USD managed to find some support overnight, at the 1.4870 level, before rebounding to trade at 1.4930 this morning.
Still the mighty pound continues to languish close to its lowest levels since June 2010. Tonight, will bring the latest array of UK data with RICS house prices, industrial production, trade balance and NIESR GDP estimates.
The AUD/USD was slightly stronger overnight, now trading at the top of its range since the start of the month, at 1.0270.
Today will bring the latest NAB business conditions/confidence survey for February. Last month, conditions still remained at a soft -2 even as confidence picked up to +3.
The market will be interested to see whether the 175bps of RBA cuts already delivered over the past two years are sufficient to boost business conditions further.
The market continues to price a further 25bps of rate cuts from the RBA. Our NAB colleagues see the risks as tilted toward more cuts than are currently priced.
Event Calendar:
12 March: AU NAB Business Confidence.
14 March NZ RBNZ MPS; AU Employment; ECB Monthly Report; US Jobless claims,
16 March NZ: PMI.
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