The USD is weaker across the board with the DXY index down 0.6% and the NZD has moved to the top of its 4-week trading range.
It feels like trader positioning has been a key driver of currency movements overnight, ahead of tonight’s US non-farm payrolls figure.
The US ISM non-manufacturing index fell slightly to 53.4, its lowest level in two years and was close to expectations, but the fall in the employment index to 49.7 got the market’s attention. However, the USD was well on its way down before the release of this report, and the figure just added to the weaker tone. US factory orders also came in slightly weaker than expected.
The NZD is up 1.2% to trade near the top of the 0.6550-0.6750 range it has spent most of the time for the past four weeks. As well as the generally weaker USD tone, Asia-Pacific currencies have been on a positive trend this week since China cut its RRR rate on Monday night.
The NZD will meet strong resistance at 0.6750 and again at 0.6775 ahead of strong technical resistance around 0.6890. The US employment figures tonight will determine whether the NZD breaks higher or settles back into its trading range.
The AUD continues its strong run, as traders reassess the outlook for monetary policy following the stronger than expected GDP data on Wednesday. The AUD is up 0.9% to around 0.7365. Earlier, the AUD reached its highest level since early December. NZD/AUD has settled into a lower trading range established since that strong GDP release and is currently 0.9170.
Both EUR and GBP are stronger, in the order of 0.5-0.7%. GBP still appears to be rallying from an oversold position last week on Brexit concerns. For now, the soft data run is being ignored.
Overnight, the Markit UK Services PMI was much weaker than expected, dropping to a near three year low. Along with weaker manufacturing and construction PMI, the data suggest a slowdown in growth ahead of the June referendum on EU membership. EUR is up after a very weak run as traders take profits on short positions ahead of the ECB meeting next week.
JPY is about as weak as the USD, with USD/JPY flat at 113.50.
Get our daily currency email by signing up here:
Daily exchange rates
Select chart tabs
BNZ Markets research is available here.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.