By Kymberly Martin
NZ Dollar
The NZD has been the worst performer amongst its peers over the past 24-hours. It trades at 0.7660 at present.
The NZD was on the back-foot from the open yesterday as local markets returned after Friday night’s strong US payrolls release.
The imminent Fonterra announcement of its 2014/2015 payout, where most expect notable downward revision, is also likely weighing on market sentiment.
Yesterday afternoon, the NZD/USD broke through key support at 0.7660 (the early-Nov low) before falling below 0.7630 overnight. However it has grappled its way back in the early hours of this morning to trade at 0.7660 currently.
All eyes will be out for the Fonterra announcement which is due any time from today. Downward revision to its previous $5.30 forecast is widely expected, so a number in the high $4s will probably not be a negative shock for the NZD. However, we suspect a number in the low $4s would. An unchanged forecast would clearly be a positive surprise.
The NZD is also lower on all the crosses, most notably relative to a rebounding JPY. The NZD/JPY traded down from afternoon highs around 93.70 to sit at 92.60 at present.
Today, as well as the prospect of the Fonterra announcement, NZ Nov credit card spending data will also be released. We see initial support for the NZD/USD at the overnight lows around 0.7630 and resistance at 0.7710.
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Majors
In a fairly quiet start to the week, the JPY has been the strongest performer, while the NZD has been the weakest.
In a light night for data releases, tight currency ranges, and slightly weaker equity markets, the most notable move was in the oil price. The WTI price was down a further 3.9%, to US$63.30, its lowest level since mid-2009.
German industrial production (Oct) was probably the highlight of the data releases for the evening, at 0.2%m/m (0.4% expected). In addition, ECB’s Nowotny was on the wires referring to “massive weakness of euro area economy”. The EUR touched intra-night lows below 1.2250 before clawing its way back toward 1.2300 currently.
The USD index sits only fractionally lower this morning, around 89.20, in the absence of major US data releases overnight. However, Fed member Lockhart was quoted overnight as saying that the Fed needs to be “patient”, and that he would see the first Fed rate hike in mid-2015 or later. Recall, the market prices a first hike around Q3 next year. We anticipate a mid-year hike.
The JPY rebounded from yesterday afternoon, despite the final reading of Japan’s Q3 GDP being worse than expected (-0.5%q/q). The USD/JPY sits at 120.80 this morning, from early afternoon highs above 121.80.
The AUD/USD found support at 0.8620 overnight and has subsequently returned to trade at 0.8290. Today the NAB AU business confidence survey will be released for November along with the AU consumer confidence survey. The independent review of the ABS labour force survey will also be released ahead of Thursday’s Nov data release.
Tonight, German trade data and UK industrial production will be released. The US JOLTS survey of job openings is also due.
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