Euro at its lowest level since 2003, and now at a new record low vs the NZD. NZD pushing higher against the AUD too

By Kymberly Martin

The CAD and NZD have been the strongest performers over the past 24-hours as European peers have struggled against a stronger USD.

The CAD was back in focus overnight as the Bank of Canada announced its rate decision. It left rates unchanged at 0.75%. This was in line with revised consensus expectations following the previous day’s strong GDP number.

However, it still caught some market participants off guard. The USD/CAD fell promptly from 1.2540 to trade around 1.2440 currently.

The EUR and GBP were generally weaker overnight in the run-up to the ECB and BoE meetings this evening. Services PMI data releases from the region were generally a little below expectation.

Even a very strong EZ retail sales number did little to support the common currency. It has broken lower to 1.1070 this morning, its lowest level since late 2003.

In the early hours of this morning the Swiss finance minister stated he would like to see a new minimum exchange rate. i.e. EUR/CHF. Although this is the realm of the Swiss National Bank, the comment suggests recent currency appreciation is having negative economic consequences. After removal of the Bank’s 1.20 floor for the EUR/CHF (mid-Jan), the currency plunged below 1.00. It has grappled its way higher in recent weeks. The EUR/CHF briefly spiked above 1.0720, after the comments early this morning, before returning to trade at 1.0670.

The AUD/USD experienced some brief volatility after the release of AU GDP early yesterday afternoon. Subsequently it pushed up to 0.7860 early this morning before returning to trade at 0.7820. It remains well within its consolidating range of the past few weeks.

Today the market will be watching AU Jan retail sales data. Our NAB colleagues anticipate another soft rise of just 0.1%m/m. The market will also be looking out for headlines emanating from a speech by RBA’s Lowe at a global macroeconomic conference this afternoon.

NZD/USD has continued to push higher overnight, outperforming on most of the crosses. The NZD/USD traded mostly sideways for most of yesterday but gained upward momentum overnight. However, resistance at the mid-Jan highs of 0.7610 remains strong. The currency failed to break through this level in the early hours of this morning. It has subsequently returned to trade at 0.7580.

The NZD extended gains against most of its peers. Notable was a push higher in the NZD/EUR to 0.6850 ahead of the ECB’s meeting this evening. This is a new high for the NZD against the beleaguered common currency.

The NZD/AUD meanwhile is butting up against resistance just above 0.9700, after a steady ascent overnight. There are no domestic data releases scheduled, so look to AU data and RBA Lowe’s speech for direction today.

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