By Raiko Shareef
NZ Dollar
NZD has popped above 0.7300 on the back of broader commodity currency strength.
NZD/USD sits 0.8% stronger at 0.7320.
While the drift upward in AUD was orderly, NZD/USD saw a sharp rally from 0.7280, breaking stops through 0.7300, and touching a high of 0.7324.
We expect a further rally to be contained at 0.7350 ahead of Governor Wheeler’s speech tomorrow at midday.
On the crosses, underperformance in the GBP has seen NZD/GBP bounce smartly away from 0.4800. It sits 0.8% stronger at 0.4860. It had looked in danger of testing the one-year low at 0.4750, and it might still do so in coming days.
NZD/JPY similarly pushed away from near one-year lows. It sits at 85.70, relative to a one-year low of 83.40.
RBNZ Deputy Governor Spencer is due to speak this morning, but his comments are not expected be made public.
QV house prices and the ANZ commodity price index are due. We pick the latter to bounce very modesty.
We pick a 0.7290 – 0.7350 range for NZD/USD.
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Majors
A generally quiet night for markets, with few surprises from the swathe of manufacturing data released globally.
Commodity currencies led most of the majors higher against the USD overnight, as oil prices added to gains made on Friday night. Bloomberg’s Dollar Spot Index has edged 0.3% lower.
Oil prices had a shaky start to the week after Friday night’s strong gains. But after opening lower, the price of WTI crude futures shot above $50 before settling at $49.2 currently, 2.0% higher for the day. Striking refinery workers have the potential to cap gains, as crude collects without being refined.
Unsurprisingly, NOK and CAD led the gains in major currencies, both up by 1.1% against the USD. The AUD followed suit, gaining 0.8% to drift above 0.78. It sits at 0.7230. One suspects that it would have performed even better, if the RBA policy decision did not loom large today.
Global PMI surveys were mixed. The HSBC China PMI was revised lower to 49.7 from the 49.8 flash reading. Germany’s PMI was similarly revised down, from 51.0 to 50.9, but the euro-wide measure held its ground at 51.0. In the UK, the PMI (no flash reading) printed at 53.0 vs 52.7 expected. That did little to help GBP, which trailed at the low end of the G10 leader-board. It sits 0.2% lower at 1.5030. The US ISM survey was disappointing.
Equity markets were sharply unchanged, with both the S&P 500 and the Euro Stoxx 60 close to their closing levels last week. Outperforming energy producers offset declines elsewhere, which were inspired by the softer growth tone.
Today, the RBA meeting has the potential to drive the biggest movers in FX, especially if Governor Stevens declines to adjust the statement’s language at all.
We will also be watching US factory orders, for signs of softness after last week’s disappointing durable goods orders.
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