NZD fell to 0.7130 USD overnight, before recovering to 0.7160 this morning, continues to find support at 0.9300 AUD; EUR, GBP and JPY under pressure from the USD, USD DXY rises about 0.7%; Oil prices up 1%, now at US$57/bbl

NZD fell to 0.7130 USD overnight, before recovering to 0.7160 this morning, continues to find support at 0.9300 AUD; EUR, GBP and JPY under pressure from the USD, USD DXY rises about 0.7%; Oil prices up 1%, now at US$57/bbl

By Doug Steel

Markets are chipper, with equity markets, commodity prices and the US dollar higher. The Dow and S&P 500 are both up around 0.4%, while the Euro Stoxx 50 closed up 0.8%. It’s a generally pro-risk environment.

The USD was quickly on the front foot from yesterday’s local session when the Fed’s Harker, a FOMC voter this year, indicated a March hike was not ‘off the table at this point.’ The DXY was up about 0.7% at one point overnight, before weaker than expected US PMI data and less hawkish comments for the Fed’s Kashkari checked the US dollar’s strength.

As political risks continue to swirl around Europe, US dollar strength was most pronounced against the EUR. Stronger than expected PMI data for both the manufacturing sectors in Germany and across the EU were not enough to prop the single currency.

At one point, EUR/USD dipped below 1.0530, before recovering slightly. The pair opens this morning at around 1.0550, down about 0.6%. GBP/USD was also under pressure for most of the night falling toward 1.2400, before staging a recovery following the US data to be flat on this time yesterday at around 1.2460. USD/JPY is up 0.4%, currently sitting around 113.60.

From around 0.7190 yesterday morning, the NZD started sliding on the Harker headlines and perhaps on expectations of a weaker GDT dairy auction. NZD/USD pushed lower overnight before finding support at 0.7130, around the 100-day moving average and a strong area off support. The GDT Price Index fell 3.2%, softer, but arguably not quite as weak as indicators suggested. This, and fading USD strength, saw the NZD recover. NZD/USD opens this morning around 0.7160, well off overnight lows.

The NZD dip saw NZD/AUD fall below 0.9320 at one point overnight, its lowest level in more than three months. Yesterday’s RBA minutes maintained positive economic commentary, but passed with little fanfare. Eyes on RBA Governor Lowe’s speech and AU wage data today. We see strong support for NZD/AUD around 0.9300, as the lower edge off the long standing 0.9300 to 0.9700 range.

Oil prices rose more than 1% overnight, with Brent crude pushing above US$57/bbl at one point threatening to test the $57.50 level that has largely contained prices this year.

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