By Kymberly Martin
NZ Dollar
The NZD has been one of the worst performers against a broadly stronger USD overnight.
The NZD/USD trades at 0.7790 this morning.
There were no surprises in yesterday’s ANZ commodity index release. World prices for NZ’s major primary export products fell 1.6% in November, much in line with our thinking.
Prices have fallen for nine consecutive months and are down 12.4% on a year ago.
It is another reason for the RBNZ to remain annoyed with the stubbornly high NZD.
Overnight, the NZD/USD started to subside in the backdrop of a broadly stronger USD. It then gapped lower after the results of the latest GDT dairy auction early this morning. Average prices fell a further 1.1%, disappointing those hoping for some rebound. The NZD/USD trades around 0.7790 currently.
The NZD is also weaker on most of the key crosses. The NZD/AUD has dipped to 0.9230 ahead of the release of AU Q3 GDP today (1.30pm NZT).
On the domestic agenda we have the RBNZ’s weekly mortgage approvals data and Q3 value of all buildings data. Today, initial NZD/USD support is eyed at 0.7770., ahead of 0.7710.
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Majors
The USD showed a broad rebound overnight, along with US bond yields. The AUD has provided the best of a poor bunch of performances over the past 24-hours.
Commodity prices are once again falling as the USD rebounds. The CRB broad global commodity index is down 1.4% since yesterday morning (note this index has declined 18% since late June). The WTI oil priced is off 1.6% and gold off 1.1%. Equities have managed to provide modest positive returns on both sides of the Atlantic as our global risk appetite index remains at 64%.
There was little to note by way of data releases overnight. Fed member Fischer’s comments gained some notice however. He suggested the Fed was getting closer to dropping its "considerable time" phrase. He suggested at that time the Fed would put the emphasis for starting rate hikes back on data rather than a date. He dismissed the idea that the Fed should get involved in managing every perceived asset-price 'bubble' unless it threatened to have major consequences for the whole economy. Otherwise "the market should correct it".
The USD was stronger against all its peers overnight. The USD index has pushed up to 88.60, level with its June 2010 and March 2009 highs. Above this level there is quite a lot of fresh air until the 2005 highs above 92.00. The USD/JPY has pushed up to trade at 119.20.
The AUD strengthened after the RBA meeting yesterday afternoon, although the RBA left rates unchanged as widely expected. There may have been some pre-positioning for an outside chance of a cut, or more direct reference to the possibility of a future cut. From 0.8480, the AUD/USD rose to 0.8540, before falling victim to broad US strength in the early hours of this morning. It trades at 0.8450 currently. Today AU Q3 GDP will be released.
Globally, a broad swathe of non-Manufacturing PMI data will be released. Tonight the US ADP employment report will be released, which the market uses as a gauge to Friday’s more crucial employment report. The Fed also releases its Beige Book assessment of the economy.
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