Traders unmoved by growing Iraq risks, Putin moves, or anything else it seems. Norwegian prices jump

by Raiko Shareef

NZ Dollar

In a sleepy night for currencies, the NZD/USD stuck with the pack, effectively unchanged at 0.8460.

The trading range of the past 24 hours says it all, with the currency sticking to an incredibly tight 16-point range.

There’s not much more we can add over and above yesterday’s comments.

With support continuing to build at and above 0.8400, it will take a blinding piece of news or data to see NZD/USD break into a new range.

If anything, the path of least resistance looks to be higher, but not to any great extent.

We doubt the market has any appetite to see an 0.86 figure, and expect serious resistance well before that.

There is nothing on the local calendar today.

Initial support and resistance are unchanged from yesterday, at 0.8430 and 0.8520 respectively.

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Majors

It was an incredibly quiet night in news and data for financial markets, with the only notable moves in equities. There, European and Asian equities played catch-up to Friday night’s rally in the US. Geopolitical hotspots continue to simmer, but these were not a focus. Major currencies are little changed.

Equities saw a sizeable bounce, building on Friday’s US session, which keyed off the paring-back of geopolitical risk after Russia announced the completion of war games. In Asia, Japan’s Nikkei gained 2.4%, while in Europe, the Euro Stoxx 50 is up 1.3%. These good vibes seem to have come full (virtuous) circle, as US indices are up for the current session, with the S&P 500 registering a 0.3% gain so far.

Currency markets largely took a back seat, with the Bloomberg Dollar Spot index effectively unchanged from Friday’s closing level. Of the major currencies we pay close attention to, none moved by more than 0.2%.

We are a little curious why geopolitical developments overnight haven’t received more attention from market participants.

Russia announced that it would be sending an aid convoy into eastern Ukraine, despite warnings from the West not to use a humanitarian mission to disguise a military intervention. Russian officials claimed to be co-operating with the International Red Cross, which has not made any immediate comment.

Separately, Iraq’s Prime Minister Nouri al-Maliki is refusing to step down in favour of Haidar al-Abadi, who has been nominated to the post by Iraq’s president. Instead, Maliki deployed special forces to the streets of Baghdad, setting the stage for a potentially violent struggle for power. The US supports Abadi. How this plays out will be of extreme interest to global investors, especially if it looks like oil supply from OPEC’s 2nd largest supplier might be disrupted. Oil prices have shown little concern, so far.

We will watch these spaces with interest. But in lieu of further negative developments, it will be back to data watching. Tonight, Germany’s ZEW survey and the US’ NFIB small business survey are due.

Other news:
* Canadian housing starts printed at +200k vs 193k exp, helping CAD gain 0.4%.
* Norwegian CPI at +2.6% y/y vs +1.9% exp, seeing NOK gain 0.85% to top the major currency leaderboard.

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