There has been little action in currency markets. The NZD peaked around the local close at 0.7277 yesterday and has back nudged down to 0.7240, not far where it opened after the weekend. Retail electronic card transactions data were very strong, but it is not a release that the market typically reacts to. Retail spending continues to be supported by robust job growth and higher real wages.
The NZD is down on nearly all the crosses, unwinding its outperformance on Friday. Overnight, NZD/AUD has tracked down to just below 0.9240. The CAD has underperformed alongside the NZD, despite oil prices rebounding by 1% so NZD/CAD is flat at 0.9130.
EUR, GBP and JPY changes versus the USD are all currently within 0.1% of the weekend close. The only newsflow that might have a modicum of interest is more hawkish comments by BoE MPC members. The BoE’s Vlieghe endorsed last week’s view of the MPC in commenting that a bit more than three 25bp policy rate increases were probably needed over the next three years. Under current market pricing of three hikes over three years the economy would still have excess demand and wouldn’t get inflation back to target. Fellow policy-maker McCafferty seemed to endorse that view as well, suggesting in a radio interview that it is likely rates would need to go up earlier. Market reaction to these comments hasn’t been significant. A heavy schedule of Brexit-related speeches planned over the next two weeks looks to be of more interest as the UK government tries to scramble together a transitional deal over the next month or so.
Get our daily currency email by signing up here:
BNZ Markets research is available here.