It was a relatively quiet end to trading last week, with generally limited movements across many markets. Equity markets were little changed; oil fell 1%. This week, despite holidays, data and central banks might spark things up a bit.
There was limited reaction from President Trump banning refugees from Syria indefinitely and from 7 Muslim countries for 90 days.
The USD was broadly stable on Friday night (DXY up 0.2%, BBDXY flat). While US Q4 GDP data undershot expectations (with a large drag from net exports via soybean exports), core demand indicators were firm. US consumer confidence rose to its highest level since 2000.
USD/JPY was the biggest mover, up 0.5% to 115.10, even spiking up through 115.30 shortly after the US GDP data. It is a lot higher than last week’s lows down toward 112.50. The pair has been supported by a step-up in BoJ JGB buying operations to hold yields down.
More broadly, the JPY was again not helped by a further creep higher in risk appetite. The VIX index edged further lower on Friday night to end the week at 10.58, its lowest level since July 2014, offering more support our risk appetite index up to a risk-loving 77.7% level.
Positive risk sentiment has added support to the NZD, as we enter a new week.
NZD/JPY rose another 0.7% over the weekend to end the week up solidly at 83.55. More broadly, the NZD TWI tested up toward 80.0 again, early on Saturday morning, before ending the week at 79.8. These are levels not seen since April 2015.
NZD/USD closed the week around mid-range at 0.7259. This morning’s trade data may bring some support if we see a small December surplus, as we expect, but Wednesday’s labour market data is the much more important local data for the week. For today, last week’s high of just above 0.7310 is notable on the top side while 0.7220 appears an area of support.
A buoyant NZD and a relatively stable AUD has seen the NZD/AUD push higher. Contrasting NZ and AU CPI data last week added to NZD/AUD positivity. Last week’s high of just over 0.9650 is visible on the top side as the pair opens this morning around 0.9620.
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