by Kymlerley Martin
NZ Dollar
The NZD/USD has been tightly range-bound over the past 24-hours.
It sits little changed at 0.8620 this morning.
Overall, currency markets traded without too much drama overnight, and the NZD was no exception. There was also no data on the domestic front to provide direction yesterday.
The NZD/USD has traded between 0.8610 and 0.8640 over the past 24-hours.
Movements on the crosses were equally unremarkable. The NZD/JPY was the only cross that really showed any direction, trading up from around 87.80 last evening to sit just below 88.10 this morning.
We are once again a little bereft on the domestic data front.
Only the April food price index is scheduled for release. We anticipate a 0.1% decline (in keeping with our 0.3% (1.7%y/y) pick for Q2 CPI).
There might be more to watch across the Tasman today however, as the AU releases its Federal Budget. This is a precursor to the NZ equivalent on Thursday.
For the NZD/USD, support remains at 0.8590.
Any push higher toward 0.8670 should be met with resistance.
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Majors
Over the past 24-hours, in fairly tight ranges, the USD index has moved sideways and the JPY underperformed.
Markets were relatively stable overnight, despite continued negative headlines from the Ukraine region. After disputed recent elections in eastern states, in which rebels declared sweeping victories, headlines suggest they are now seeking to join Russia.
However, our global risk appetite index (scale 0-100%) has inched up to a very respectable 77%. Equities have posted gains on either side of the Atlantic. The Euro Stoxx 50 closed up 0.7% while the S&P500 is currently up 0.9%.
The USD index has consolidated its previous day’s gains, trading a tight range between 79.80 and 79.90. The most notable relative weakness was seen in the JPY. The USD/JPY strengthened from 101.90 toward 102.20.
Otherwise it was all relatively calm in most currencies. The AUD/USD briefly pushed above 0.9380 early this morning before subsiding back toward 0.9360.
Today sees the Chinese monthly dump data. This includes investment, retail sales, and industrial production. The market is looking for results to be fairly stable, to marginally up, on last month’s readings. The AUD, as always, will be vulnerable to any disappointments.
As important for the AUD today will be the Australian Federal Budget. Many of the details have already been leaked. However, our NAB colleagues expect the result to be a fiscal contraction of ½% of GDP for 2014/2015 behind a Budget deficit of $A29 bln (1.8% of GDP). This is down from December projections of $A33.9 bln (2.1% of GDP).
Tonight the German ZEW survey of the economy and US advance retail sales data will be released.
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