by Kymberly Martin
NZ Dollar
The NZD made an intra-night rebound on Friday, after the US payrolls release, to end the week above 0.8510.
The NZD/USD had been drifting steadily lower on Friday ahead of the much-anticipated US payrolls data.
After the release came in below consensus expectations the NZD/USD was boosted higher.
From around 0.8460, the NZD/USD spiked above 0.8530, before easing off into the close.
Friday night’s lows mark the NZD’s 200-moving average and will remain a key level of support today. Resistance is eyed approaching 0.8540.
There was a fair amount of volatility on the crosses on Friday night, provoked by the US data release. The NZD recovered from intra-night lows on most key crosses.
Having traded as low as 0.9120, the NZD/AUD ended the week at 0.9140.
We are entering an important week for the cross with highlights on both sides of the Tasman.
The focus will be on Wednesday’s NZ employment report, the AU equivalent on Thursday and tomorrow’s RBA meeting.
For today, the ANZ commodity price index release (1pm NZT) will be the domestic highlight. We expect a 1.3% drop in the world-price index.
But it is important to note the ongoing divergence beneath the headline. For example, while dairy and log prices will likely register further decline, beef and aluminium prices should strengthen. Still, the headline may be sufficient to put the NZD on the back-foot this afternoon.
To subscribe to our free daily Currency Rate Sheet and News email, enter your email address here.
----------------------------------------------------------
Majors
The USD was broadly weaker post the US payrolls report, but the GBP was the key under-performer on Friday night.
Most currencies largely traded side-ways ahead of the release of the US payrolls report. The release showed US non-farm payrolls at 209,000 k (230,000k expected). In addition, the unemployment rate ticked up from 6.1% to 6.2%, but largely due to an increase in the participation rate. However a defining component of the survey for the market was likely that wage pressures remain contained. Average hourly earnings grew 0.0%m/m (0.2% expected). On the release, the USD dropped, along with US yields. From above 81.50 the USD index ended the week at 81.30. The S&P500 equity index closed down a modest 0.3%.
European currencies were key beneficiaries. The SEK, that had been on the ascendancy prior to the payrolls release, was the key outperformer on Friday. It rose 0.6% relative to the USD. The EUR/USD popped higher to end the week at 1.3430.
The GBP was one of the only currencies to underperform the USD on Friday, due to a disappointing UK data release. The July UK Manufacturing PMI came in at 55.4 (57.2 expected). The GBP/USD dropped from above 1.6880 to end the week at 1.6820.
The AUD/USD also benefitted from the weaker USD. From 0.9280 it briefly spiked above 0.9330 before ending the week at 0.9310. There is plenty on the AU agenda this week with the RBA meeting tomorrow and the AU employment report on Thursday. For today, the focus will be the AU June retail sales report. Our NAB colleagues expect a flat outcome, slightly better than declines seen in April and May.
Tonight, the UK construction PMI will be released along with the EU investor confidence index.
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.