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NZD trading close to session low at 0.7170; USD up 0.6% on a TWI basis with 2.1% CPI and positive industrial production data; GBP down 0.8% on negative European media response to May's speech

Currencies
NZD trading close to session low at 0.7170; USD up 0.6% on a TWI basis with 2.1% CPI and positive industrial production data; GBP down 0.8% on negative European media response to May's speech

By Jason Wong

The USD has recovered some of the losses made post Trump's comments on the “high dollar”. It's been a fairly steady recovery, with a gain of about 0.6% on a major currency TWI basis.

US economic data have supported the move, with the CPI showing an annual gain of 2.1% y/y, the highest rate in 2½ years, in line with expectations.  Also, industrial production recovered in December after the weather-related fall the previous month.

GBP has lost ground after its strong recovery in the previous session. Reality has started to bite following the euphoria around PM May's Brexit speech in which she laid out a vision for a truly “Grand Britain”. The European media response was generally one of repulsion, with one Germany paper mocking the speech with a “Little Britain” headline. The response highlighted the difficulties of May achieving her vision, with considerable pushback likely from the EU. GBP is down 0.8% to 1.2315 but is still up over 1% for the week.

The NZD is down around 0.6%, reflecting the USD strength and trades this morning close to its session low around 0.7170. NZD/AUD is back to around the 0.95 mark as the AUD has outperformed a bit and sits at 0.7545. Of the commodity currencies, CAD has been the worst performing, losing around 1.4% against the USD. This followed Governor Poloz's dovish comments at a post-meeting Press Conference, with a rate cut said to be remaining on the table.

USD/JPY has traded in a wide range over the past 24 hours. After reaching a low of 112.57 the currency trades back up to 113.40, influenced by the rebound in US Treasury yields.


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2 Comments

Repulsion? I must have a different understanding of the meaning of the word.

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Talk is cheap...can even trash exchange rates for almost.....nothing.

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