Home Daily Commentaries Kiwi steady ahead of Trade Balance figures

Kiwi steady ahead of Trade Balance figures

Daily Currency Update

The New Zealand dollar continues to trade in a holding pattern as a quiet day on the markets for the local currency meant there has been little news to report. Opening the morning at 0.6635, the Kiwi moved in a steady direction higher but was limited to a thirty-point range for the day as we saw the NZD/USD cross top out at 0.6660.

We expect market participants to become more involved over the next 24 hours as both Trade balance and ANZ Business confidence levels are released this morning domestically. Furthermore, both the Central banks of the United States and New Zealand meet for their latest interest rate decision tomorrow morning where it is expected the Federal reserve will increase interest rates by 0.25% with the RBNZ expected to hold steady at 1.75%

The New Zealand Dollar opens this morning at 0.6645.

Key Movers

In what was a quiet day of trade for markets yesterday, the AUD slipped against the USD from 0.7262 to briefly touch lows of 0.7236 before rebounding into this mornings open where the local currency is currently buying 0.7247 US cents.

With US Consumer Confidence rising for the month of September recording its highest level in nearly eighteen years and beating expectations of a decline shows that consumers assessment of current conditions are positive which is bolstered by a strong economy and robust job growth in the US. The Consumer Board's index rose to 138.4 this month from 134.7 in August. This data along with investors waiting for the result of the Federal Reserve’s FOMC meeting where an interest rate hike is widely expected kept a lid on the Aussie.

There is no local data due today, however all eyes on the US Federal Reserve tonight.

On the technical side, first line of support is at 0.7230 followed by 0.7200, on the upside, resistance at 0.7280 and 0.7300

Tuesday saw the Sterling rise for the second consecutive day as a softer dollar and optimistic Brexit expectations buoyed the local unit. Rising 0.4% on the day the GBP/USD touched highs of 1.3193 as traders continued where they left off on Monday, unwinding short GBP/USD positions after last weeks selloff. The Pound was also slightly stronger against its European counterpart with the EUR/GBP opening this morning Sydney time at 0.8927.

It is worth noting that investors were still wary of bidding the sterling up above last weeks high of 1.3295 as the uncertain political situation, particularly prime minister May’s position, continue to weigh on the currency. The UK labour party conference has only served to highlight how divided the party is on Brexit.

Looking forward GBP/USD traders will be watching the FOMC monetary policy decision. Markets are expecting the FED to raise their benchmark interest rate however any surprises in the accompanying commentary from chairman Powell will inject some volatility into the market . Thursday also sees ECB president Draghi and BOE Governor Carney deliver speeches before we get UK Q2 GDP and current account metrics on Friday.

On the technical front GBP/USD seems relatively well supported around 1.3082 with any upside moves likely to be met by resistance at the 1.3200 handle. Technical levels to consider for the EUR/GBP are 0.8874 on the downside and 0.8975 on the topside.

Overnight we saw U.S. consumer confidence unexpectedly jumped to the highest in 18 years in September, according to a report Tuesday from the New York-based Conference Board. Sentiment improved a third month, reaching one of the best levels in a half century of data, as a strong job market and tax cuts keep Americans optimistic about the state of the economy. Consumer confidence index increased to a reading of 138.4 this month from an upwardly revised 134.7 in August.

Looking ahead today and there are no scheduled releases in the US. All eyes will be on tonight’s Federal Open Market Committee (FOMC) statement with the official cash rate expected to rise from 2.00% to 2.25%. Traders are predicting two more rate hikes this year from the Federal Reserve to go along with economic growth nearing 3 percent.

The greenback overnight, in terms of the US Dollar Index (DXY), fell a fifth of a percent to 94.06 against a basket of its rivals ahead of the Federal Reserve rate announcement.

With little on the domestic calendar and a quiet day in the papers the market has mainly tread water ahead of the United States FOMC’s policy announcement slated for release a little later today. The Euro was no exception to this, trading within a tight range to open this morning at 1.1766.

There was little for market pundits to digest in overnight trading but the European Central Bank did release a statement. ECB Chief Economist Praet downplayed remarks from the earlier speech by ECB President Draghi that was interpreted as mostly hawkish. The Euro did slide slightly on the news but mostly took it in its stride. Across the Atlantic, there was also some strong US consumer confidence numbers that reiterated the on-going strength of consumer spending and the tightening US labour market.

Moving into Wednesday all eyes are fixed on the upcoming FOMC meeting which is set to see the Federal Funds rate rise 25bps to 2.25%. Focus will also be on clues to the Fed’s thinking on projected rate guidance.

The Canadian Dollar continued its weekly trend and traded flat for most of the day ahead of the FOMC policy announcement slated for release today. Broader developments remain dominant in the absence of any high-level domestic data. Opening this morning at 1.2952, the Loonie looks to consolidate ahead of a much more active run to the weeks close.

There wasn’t too much to report on the Canadian domestic calendar but the Loonie did see some movement from developments on the geopolitical landscape. Crude oil prices continue to push higher, and commodities remain in demand to support the CAD. Conversely however, US Trade Representative Robert Lighthizer recently commented on the on-going NAFTA negotiations and stated that Canada was not making concessions on key NAFTA issues and time was running out. The market did oscillate on the news but ultimately ended in a stalemate ahead of the US FOMC’s policy announcement due on Wednesday.

Moving forward, all eyes remain fixed on the expected rate hike by the FOMC today. CAD investors will also keep a close eye on US GDP numbers on Thursday and the Bank of Canada’s Governor Poloz’ speech.

Expected Ranges

  • NZD/AUD: 0.9090 - 0.9190 ▼
  • GBP/NZD: 1.9750 - 1.9920 ▲
  • NZD/USD: 0.6590 - 0.6690 ▼
  • NZD/EUR: 0.5600 - 0.5680 ▼
  • NZD/CAD: 0.8550 - 0.8650 ▼