by Kymberly Martin
NZ Dollar
The NZDUSD opens little changed this morning at the 0.8260 level, overnight it survived one shank lower in vapid markets that drew out buyers demand in front of the US 82 cent level.
No lasting impression on the Kiwi from yesterday’s series of shakes across the lower North Island, touch wood they’re behind us now.
Let’s hope today’s excitement is limited to the Q4 CPI.
For this we have estimated a 0.3% quarterly dip, suppressed by weakness in food prices and other seasonal regularities.
This would nudge annual CPI inflation down to 1.3%, from 1.4%. Note that the December Monetary Policy Statement figured on a 0.2% fall in the Q4 CPI, for a steady 1.4% annual outcome – so the potential for a target-rattling surprise seems extraordinarily low.
Interest in the NZ economic calendar through the rest of this week comes in the form of a busy Thursday for the BNZ PMI, and ANZ’s Job Ad series as well as their Consumer Confidence survey.
By tomorrow morning we’ll also have the latest GDT dairy auction where prices are expected to remain in a tight range.
On the day, a subdued start ahead of the CPI print otherwise the market continues to trade with the slightly heavier bias established late last week.
The 0.8300/0.8325 window important short term resistance on the topside, whilst a run lower would open the Kiwi up to revisiting the 0.8150 level not seen since the first few days of the New Year.
Glancing across the board the NZDAUD remains in good heart, though having retreated from shy of the 95 cent level could recoil to the 92 cent level in coming days if data disappoints the hawks.
NZDEUR continues to trade capped at 0.6150 with initial support anticipated closer to 0.6025. In the meantime, 10:45am is the focus and the release of the CPI.
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Majors
The observance of MLK day in the US has thinned market participation and overnight commentary is sparse.
Most column inches are devoted to yesterday’s softer Chinese updates of GDP and IP, and indeed Japanese IP, which coloured Asian market sentiment.
The quarterly GDP print of 1.8% was lower than the 2.0% expected and suggests an annual rate closer to 7.25%, a hint of slowing in growth momentum that some commentary notes. Not surprisingly the data kept the pressure on the AUD as it shades 3 ½ year lows with trading accounts maintaining their “short” AUD bias in positioning.
A light day ahead on the calendar across the Tasman, with resistance immediately apparent at the 0.8825 level with support pegged in the window ahead of 0.8750.
Tomorrow it’s the turn of Australia to update Q4 CPI, our analysts forecasting an outcome that illustrates benign inflation pressures.
Overnight the limited interest in FX markets tended to centre on the GBP, maintaining its recent favour thanks to whispers the IMF are about to upgrade their UK outlook. Growth in their opinion set to rise to 2.4% from their current expectations of 1.9%.
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