In FX markets, the USD is generally stronger, reversing some of the moves from the prior day. The JPY and CHF are the outperformers (although still down against the USD on the day) amid a mild risk-off sentiment.
Having reached as high as 1.2477 yesterday, the EUR has fallen back to just above 1.24 now. The EUR has failed to decisively break above 1.25 on several occasions so far this year, and some profit-taking in advance of this level was to be expected. Eurozone Economic Confidence was a little weaker than expected overnight, continuing the trend of some softening in European data (such as the PMIs) in recent months, although still consistent with strong growth in the Eurozone. Comments from ECB official Liikanen overnight that the bank’s QE programme could be extended were brushed off by the market. The market expects QE to finish in either September or December this year, with the real debate to centre on the timing and scale of any rate rises in 2019. The first (10bp) hike is priced-in for June next year.
The NZD is a little weaker than this time yesterday, in line with the appreciation in the USD overnight. NZD/AUD has pushed on to fresh highs, and is currently sitting just above 0.9450 (the AUD has once again been one of the underperformers amongst G10 FX). Local rates markets saw little move yesterday, although swap rates should fall today on the back of the moves in US Treasuries. This morning we have the ANZ Business Survey.
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