Equity markets are generally lower, led by energy stocks as oil prices fell. US yields are flat to lower, while the EUR is higher.
It was real economy indicators that generated market movement overnight. German GDP rose 0.8% in Q3 coming in stronger than market expectations. It was enough to put a rocket under the EUR, later supported by EU GDP matching priors of 0.6%. From around 1.1670 before the German data, EUR/USD got a one-way ticket higher punching up towards 1.1800 and extending its positive streak to five days. GBP was dragged higher, with GBP/USD up about 0.4% currently sitting close to 1.3170.
Reflecting EUR strength, US dollar indices retreated. US data did nothing to halt the slide. NFIB small business optimism did rise in October, but not as much as expected and ultimately a disappointing bounce post the hurricane impact. US PPI inflation did print higher than expected even after excluding food and energy components, but only met expectations after excluding other volatile components. The DXY Index is down 0.6%. USD/JPY is marginally lower at around 113.40, after trading a circa 113.30 to 113.90 range.
NZD is generally lower, although it pared some losses through the night. NZD/USD fell to just below 0.6850 before turning around shortly after the better European data. NZD/USD opens this morning about 0.2% below this time yesterday at around 0.6880. EUR strength sees NZD/EUR down around 1.3% and is currently around its lows, close to 0.5840.
NZD/AUD came under downwards pressure yesterday afternoon, following the NAB business survey showing AU business conditions at their highest level since the survey started in 1997. From around 0.9055 pre data, NZD/AUD hit a low just under 0.8980 early yesterday evening before recovering. The cross opens this morning around 0.9020, down around 0.2% on this time yesterday. Positioning does not favour further NZD/AUD weakness, with latest IMM data showing the speculative market net short NZD and net long AUD.
Despite the strong business conditions result, AUD/USD still looks vulnerable near its recent lows, currently sitting around 0.7630. Yesterday’s push up towards 0.7650 was capped when Chinese activity data generally printed a bit under expectations. Commodity prices were again mixed overnight, with oil prices losing around 2%, metals generally lower, while iron ore rose1.6%.
Get our daily currency email by signing up here:
BNZ Markets research is available here.