by Kymberly Martin
NZ Dollar
The NZD has traded between 0.8630 and 0.8690 over the past 24-hours, sitting at 0.8670 this morning.
The NZD absorbed yet another strong domestic data point yesterday. The Performance of Services Index for March was 58.3. This was up 5.5 points from February and the highest level of activity since November 2007. For the first quarter of 2014, the PSI averaged 56.4. Still, with much of the NZ ‘good news’ story now priced by the NZD, the currency will increasingly take its cue from moves in the USD.
A general strengthening trend in the USD saw the NZD/USD dip briefly to 0.8630 last evening. However, it has clambered back to trade at 0.8670 currently.
There was not much drama on most of the NZ crosses overnight. However there was a notable weakening in the NZD/AUD last evening. From 0.9240 the cross now sits at 0.9210. This is the lowest level on the cross since mid-February.
Today, there is nothing scheduled on the domestic agenda, although across the Tasman all eyes will be on the release of April RBA Minutes.
In the early hours of tomorrow morning the latest Global Dairy Trade auction will take place. Prices have dropped 18% in the past two months. Given the underlying supply dynamics, we favour a further fall at the auction.
Increasing recognition that NZ commodity prices have peaked will take a toll on the NZD with time. It is a key reason we see the NZD lower by year-end.
For today, NZD/USD resistance will be encountered approaching 0.8700. Support is eyed at 0.8640.
To subscribe to our free daily Currency Rate Sheet and News email, enter your email address here.
----------------------------------------------------------
Majors
The USD was slightly stronger, but overall it was a relatively quiet night for currencies.
The general tone in markets improved overnight, assisted by a stronger-than-expected US retail sales report and positive surprise on Citigroup’s earnings delivery. This was able to counteract some negativity in markets earlier in the evening. There were reported deadly clashes between Ukrainian forces ad pro-Russian gunmen.
Overall, our global risk appetite index (scale 0-100%) stabilised at 60%. Equities provided positive returns. The Euro Stoxx 50 closed up 0.5% while the S&P500 is currently up 0.2%.
US March retail sales came in at 1.1%m/m (0.9% expected). The jump in sales was mainly due to the unwinding of distortions caused by the unseasonably bad weather in previous months. While the USD was already on the ascendancy, the data helped give the currency a boost early this morning. The USD index sits at 79.70 currently.
The EUR was softer overnight, likely still smarting from ECB President Draghi’s most recent comments about the currency. It seemed unimpressed by data showing EC industrial production rose in line with expectation at 0.2%m/m in February (1.7%y/y). The EUR/USD slipped from 1.3860 to sit at 1.3820 currently.
The AUD has been the strongest performing currency over the past 24-hours. The AUD continued its recent steady climb. From 0.9390 last evening, its sits just below 0.9420 this morning. Today all eyes will be on the release of the RBA’s April Minutes. The Bank will likely sound very comfortable in its neutral stance, but look out for any comments regarding the AUD. The Bank will be less than enamoured with the AUD/USD’s 8%+ rise since late January.
Tonight, UK and US CPI will be released. They will likely confirm inflation is not an impediment to the highly accommodative monetary policies in both regions. The German ZEW survey will be released. US Fed Chair, Yellen, is also scheduled to speak at the Financial Markets Conference.
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.