by Raiko Shareef
NZ Dollar
The NZD is effectively unchanged against the USD relative to yesterday morning, sitting just under 0.8630.
Yesterday’s two local releases hardly troubled the scorers.
The BNZ-BusinessNZ PSI is little-watched, but it is interesting note that cobbling together the latest PMI and PSI readings suggests annual GDP growth of around 4%.
That is consistent with our formal forecasts, which push just above that mark later on this year.
The inflation reading from the production side of the economy for Q1 2014 jumped to 4.0%/3.1% y/y (outputs/inputs). Not particularly surprising, given the commodity export price boom the economy is currently experiencing.
The NZD was actually on the up through our session, but was dragged lower overnight along with the AUD, following the S&P comments around Australia’s AAA credit rating.
Naturally, these took a heavier toll on the AUD, which left NZD/AUD slightly higher for the day at 0.9240.
We see the cross oscillating around 0.93 through year-end.
Another lacklustre day ahead, we think. None of the releases due over our session should incite much volatility. For the day, we see initial support to be tested at 0.8620, and resistance at 0.8700.
To subscribe to our free daily Currency Rate Sheet and News email, enter your email address here.
----------------------------------------------------------
Majors
A sleepy start to the week for currency markets, thanks to a dearth of data to take cues from. Most major currencies failed to move by more than 0.25% against the USD.
The AUD was one of the weakest performers of the evening, thanks to a warning from the credit rating agency S&P that the country’s AAA credit rating is at risk.
One of the agency’s lead sovereign analysts said Australia’s rating could be reassessed if the Senate does not approve at least “some” of the $37bn in savings proposed in last week’s Budget. The AUD is 0.3% weaker against the USD at 0.9330.
The JPY continues to strengthen, with some analysts pointing to percolating concerns about softer global growth and inflation. The implication is that the JPY benefits from a safe haven bid. Whatever the case, the string of recent gains against the USD has pushed the JPY against significant technical support at the 200-day moving average (101.23). Having broken through that overnight, the USD/JPY has since retraced the move, but sits precariously close at 101.33. While a close below that level would be bullish for JPY, we remain wary that JPY strength would encourage a Bank of Japan policy response against it.
The data calendar today offers little hope of market movement. In our time-zone, the RBA minutes will attract only passing attention, having been superseded by the quarterly Statement on Monetary Policy. Similarly, fireworks aren’t expected from RBA Deputy Governor Debelle’s address to a business lunch.
Overnight, just the UK has data of note due. The inflation readings might be passed over in favour of the latest official reading on house prices. Bank of England Governor Carney warned over the weekend that the Bank could take targeted action to cool the housing market.
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.