By Kymberly Martin
NZ Dollar
The NZD/USD has climbed from early evening lows around 0.7620 to trade close to 0.7700 currently.
The NZD/USD remains at the whim of global markets as the local market remains somewhat in summer holiday mode.
Early yesterday evening the NZD/USD tested support just above 0.7610, the level which arrested the currency’s fall in early December. It has subsequently grappled its way back toward 0.7700 despite poor risk sentiment overnight.
The NZD/USD has also strengthened on most of the crosses overnight, with the exception of the NZD/JPY.
The NZD/JPY has consolidated around 0.9200 as the JPY is supported by ‘safe haven’ flows.
The NZD has pushed higher against volatile European peers over the past 24-hours. The NZD/GBP now trades at 0.5050. The NZD/EUR trades around 0.6460, close to its highs since July last year.
Having touched lows yesterday afternoon close to 0.9460, the NZD/AUD now trades around 0.9520.
There are no domestic data releases scheduled for today but some low-key AU releases are due (consumer confidence, trade balance).
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Majors
The JPY has been the strongest performer and the EUR the weakest over the past 24-hours, while the USD has consolidated its gains.
Overnight our global risk appetite index has slipped further, to 39%, as the oil price continues to plunge and equity markets have fallen, led by the energy sector. The WTI price has fallen another 5.0% toward US$50/barrel. This move was assisted by comments from Iraq’s oil ministry suggesting it intends to expand production this month. But the continued precipitous fall in prices also fuels more sinister concerns of a drop in global demand.
In addition to these concerns, data overnight showed German inflation to have dropped from 0.5% to just 0.1%y/y (EU harmonised) in December. The spectre of Greek elections later this month also continues to weigh on markets. The Euro Stoxx 50 closed down 3.7% while the S&P500 is currently down 1.3%.
In this backdrop the JPY has outperformed, in its perceived ‘safe haven’ capacity. The USD/JPY has slipped from 120.60 to 119.70 currently.
While the EUR/USD had a dramatic break lower yesterday morning, it has subsequently stabilised at a lower level. It trades at 1.1920 at present, a smidge above the June 2010 lows of 1.1880.
Trading in the GBP/USD mimicked the volatility of the EUR yesterday. Sentiment toward the GBP was also not helped by the release of the UK Dec Construction PMI that disappointed expectations (57.6 vs. 59.0). The GBP/USD trades at 1.5230 this morning.
Yesterday’s AU Dec Performance of Manufacturing Index fell to 46.9 from 50.1 previously (a reading below 50.0 shows the sector is in contraction). Despite dipping to lows around 0.8040 early last evening the AUD/USD has clawed its way back toward 0.8100 currently.
Today, the weekly AU ANZ Roy Morgan Consumer Confidence will be released and the November trade balance. This afternoon the HSBC China Services PMI is also due. Tonight, UK and Eurozone Services PMI will be released.
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