By Kymberly Martin
NZ Dollar
The NZD/USD sits at a similar level to yesterday morning, around 0.7890 currently.
Yesterday morning’s BNZ PMI confirmed the NZ manufacturing sector remains well in expansion, with a seasonally adjusted measure for September of 59.3. The employment subcomponent, at 57.5, was the highest reading since the survey began in 2002.
This points to further improvement in the labour market in the current quarter.
After this release the NZD/USD was trading a fairly steady sideways path until it was side-swiped by RBA comments mid-afternoon. The NZD fell along with the AUD, before recovering overnight to push above 0.7920. It has now given back some of the gain to trade around 0.7890.
The NZD/JPY and NZD/GBP both pushed higher overnight. The NZD/JPY made a couple of attempts to push above 91.60 before returning to trade at 91.30 currently. Still, it remains close to its highest level since October 2007. In mid-2007, the cross peaked at 97.80. We do not see it revisiting these levels, in this cycle, as we expect both the NZD and JPY to weaken against the USD in the year ahead.
Meanwhile the NZD/GBP has clawed its way back above the 0.5000 level, trading at 0.5020 this morning. This is its highest level since mid-September and is just shy of the 200-day moving average (0.5051).
Today looks to be relatively quiet with no data releases scheduled locally. Resistance for the NZD/USD remains at 0.7930 while support is seen at 0.7840.
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Majors
While the USD has largely traded sideways over the past 24-hours the GBP has been the weakest performer, and the AUD has experienced something of a roller-coaster.
China data for October was delivered early in the evening but provided little in the way of surprise, although marginally below expectation. Industrial production was seen growing 7.7%y/y (8.0% expected). This is further evidence Q4 has started slowly. But with Chinese officials still sounding relaxed, it does not seem likely there will be any shift in policy as a result.
Generally markets were relatively calm overnight, with fairly flat equity and commodity indices. The exception was the WTI oil price which has fallen a further 2.3%, to US$75.4/barrel, its lowest level since May 2009.
The GBP/USD was the worst performer overnight, continuing its recent slump. UK RICS house price data showed further cooling, a trend in place since Q1 this year. The GBP/USD has slipped from 1.5780 to trade around 1.5710 currently.
The AUD/USD has experienced a volatile 24-hours. Yesterday afternoon it plunged after comments from Assistant RBA Governor Kent, at his scheduled speech. In response to a question, he answered that the RBA has not ruled out fx intervention. He also reiterated the RBA believes the AUD is too high relative to fundamentals. However, from early evening lows around 0.8670 the AUD/USD grappled its way back up to 0.8760 intra-night. It now trades around 0.8720.
Tonight, the final reading of Eurozone October CPI will be released. The core measure is expected to sit at 0.7%. Eurozone Q3 GDP is also due. Consensus expects 0.1%q/q (0.7y/y). October retail sales will be the US data highlight tonight. The University of Michigan Confidence survey will also be released.
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