By Kymberly Martin
NZ Dollar
The NZD has been the strongest performer over the past 24-hours, gaining more than 1.4% against the USD.
It trades at 0.7800 this morning.
The NZD outperformed overnight despite still poor general risk sentiment.
It was boosted by the results of the latest Global Dairy Trade auction in the early hours of this morning. Average prices rose 3.6% from the previous event, their biggest gain in more than six months. This will come as something of a relief after dairy prices fell 48% in 2014. The NZD/USD popped from 0.7740 to trade just below 0.7800 currently.
The NZD was stronger on all the crosses, even against the currently rebounding JPY. There were striking gains against European peer and the AUD. The NZD/GBP and NZD/EUR trade at 0.5140 and 0.6530 respectively this morning. The latter is at the highest level since April 2013.
The NZD/AUD has pushed up to 0.9610 this morning following the GDT auction, a new cyclical high. Today the NZ ANZ Commodity Price Index will be released and the AU Services PMI. For the NZD/USD, we see resistance around 0.7850. Support is eyed at 0.7770.
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Majors
Over the past 24-hours the JPY has strengthened along with the NZD, while the GBP has underperformed.
Risk sentiment remains fragile. Our global risk appetite index has fallen to 34% as equities have had another negative night and the oil price continues to plunge. The WTI oil price has now fallen 55% over the past six months, currently trading at US$48/barrel.
In this cautious market backdrop the JPY continued to outperform in its ‘safe haven’ capacity. From 119.40 last evening the JPY now trades at 118.30.
The GBP was amongst the weakest performing currencies overnight. The release of the UK Dec Services PMI disappointed expectations at 55.8 (58.5 expected). The accompanying commentary from Markit the survey provider stated; "Weaker rates of expansion were seen in services, manufacturing and construction in December, taking the overall pace of economic growth to the weakest for just over a year-and-a-half.” This will fuel the market’s questioning of the prospects for BoE rate hikes. The market now only prices a 15% chance of a BoE hike by end-2015. The GBP/USD has fallen to 1.5180.
Meanwhile the market is still looking for the US Fed to raise rates around September this year, despite the obvious disinflationary impact of recent oil price falls. The USD index sits around 91.30 this morning having traded above 91.60 overnight.
The plunging EUR has managed some consolidation overnight, now trading around 1.1940, having failed to break below crucial support at 1.1880 overnight. The final reading of the Eurozone Services PMI came in not far from expectation at 51.6. However the more critical data release will be tonight’s Eurozone Dec CPI reading. This will likely confirm the region remains a hair’s breadth from deflation. German retails sales and unemployment data are also due.
The AUD sits at 0.8110 this morning, having touched above 0.8150 overnight. Today the Australian Performance of Services PMI will be released.
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