Greek situation has markets on hold. Even good US data can't shift thinking. Local eyes turning towards current account elements

By Kymberly Martin

Many currencies were fairly range-bound overnight as Greek negotiations ground on.

The AUD/USD has outperformed over the past 24-hours.

With no Greek resolution in sight overnight, most markets remained somewhat in limbo.

Stronger-than-expected US personal spending data failed to inspire much of a reaction from the USD. The increase in May was the biggest monthly gain in six years and adds weight to the idea that 1Q data weakness in the US was weather-related.

You could draw a straight line through trading in most currencies overnight. However, the AUD sits a little higher this morning after rising during the day yesterday. Gaining 0.5% versus the USD over the past 24 hours it has been one of currencies biggest movers. It trades at 0.7740 currently.

The NZD/USD has steadily inched higher since yesterday morning, trading at 0.6910 currently. We continue to see near-term support at 0.6820, while resistance should be encountered on any push toward 0.7000.

Over the medium-term we see further weakening, as the USD is supported by the start of the US Fed rate hiking cycle.

We see the NZD/USD trading down toward the mid-60s in the year ahead.

For today the domestic focus will be the release of NZ trade balance data. These have taken on greater prominence in light of the RBNZ’s comments in the June MPS that further downward adjustment in the NZD was justified, “in light of the forecast deterioration in the current account balance”. 

Kymberly Martin is on the BNZ Research team. All its research is available here.