by Kymberly Martin
NZ Dollar
The NZD had underperformed its major peers over the past 24-hours to sit at 0.8540 this morning.
The NZD/USD paddled sideways yesterday during a quiet day on the domestic data front. Then, overnight, as global risk appetite remained fairly subdued the NZD subsided along with the AUD.
At 0.8540 the NZD/USD is now at the lower-end of its six week trading range. Key support is now eyed around 0.8500-0.8510.
Today, at 9am (NZT) the NZ Labour party will unveil its thoughts on the NZ monetary policy framework. Details may show a wider remit for the RBNZ, beyond its central inflation targeting mandate.
The Central Bank may also be given additional prudential type tools to undertake this job. In addition, the framework might encourage, more directly, the RBNZ to intervene in the NZD market. The announcement will be viewed with interest by the currency market.
Otherwise, today’s domestic focus will be on the release of March trade balance figures. We’re expecting another solid set of numbers, with exports of $4981m (13%y/y), and imports of $4043m (10%y/y), making a March surplus of $937m (consensus $900m).
This should all be good for GDP and the NZ current account.
The most notable moves on the crosses overnight were against the NZD’s European peers. The NZD/GBP and NZD/EUR have declined to 0.5080 and 0.6160 respectively. These are their lowest levels since mid to late March. Key for the NZD/GBP this evening will be the release of UK Q1 GDP.
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Majors
Despite some volatility overnight the USD index sits little changed around 79.70 this morning. The AUD underperformed along with the NZD.
The situation surrounding Ukraine remains tense.
The US has announced further sanctions on 7 Russian officials and 17 companies associated with President Putin.
Our global risk appetite index (scale 0-100%) continues to cling on at 66% as equities attempt to bounce. The Euro Stoxx 50 closed up 0.60% and the S&P500 is up 0.1%.
The S&P500 Q1 earnings reporting season continues. With around half of companies now reported, the positive earnings surprise stands at 5.7%.
Early last evening the USD index declined as the EUR and GBP attempted a rally. The GBP/USD attempted to push through year-to-date highs. But after trading above 1.6850 it has slipped back to 1.6810, ahead of this evening’s release of UK Q1 GDP. The GBP/USD remains close to its highest levels since late 2009 suggesting the market would not respond well to a disappointing GDP number. Consensus expects a 0.9%q/q outcome, to take the annual growth rate to 3.2% (2.7% previously)
The AUD sits a little lower this morning at 0.9250. Overnight, it briefly touched above 0.9310 before gradually declining through the early hours of this morning. While the NAB agribusiness survey will be released today, greater interest will lie with tomorrow’s AU private sector credit numbers.
While it is relatively quiet on the local data front, tonight’s highlights will be German CPI, along with UK Q1 GDP and the US Consumer Confidence Index.
The US Fed’s FOMC also kicks off its two day meeting although its announcement will not occur until early Thursday morning (NZT).
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