Home Daily Commentaries New Zealand dollar holds above 67c ahead of next weeks CPI

New Zealand dollar holds above 67c ahead of next weeks CPI

Daily Currency Update

The domestic docket offered little to excite investors on Thursday and once again the New Zealand Dollar fell during Asian and European trade against the Greenback driven by weak equity markets. The NZD/USD pair touched a low of 0.6727 before a knee-jerk reaction to a Wall Street Journal report claiming that US officials were weighing the option to lift the tariffs on Chinese imports to calm the markets. Kiwi jumped up 40 pips and hit 0.6786 but has settled back down around 0.6764 at the time of writing. After a spokesman for the U.S Treasury denying these claims.

Looking ahead today sees the release of Business NZ Manufacturing Index which measures the level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories.

On a technical front, Support sits at 0.6745 followed by 0.6730, on the up side, resistance sits at 0.6780 and 0.6800

Key Movers

The Australian dollar is little changed this morning when valued against the greenback. The Aussie reached an overnight high of 0.7221 before settling down again below the 0.7200 level.

On the release front yesterday Australian Consumer Inflation Expectations fell to 3.5% in January, down from 4.0% in the previous month. Australian Home Loans also declined by less-than-anticipated in November -0.9%. Investment Lending for Homes also falling by 4.5%. Today will see the release of housing data the Housing Industry Association (HIA) which is a leading indicator of economic health because the sale of a new home triggers a wide-reaching ripple effect.

From a technical perspective, the AUD/USD pair is currently trading at 0.7192. We continue to expect support to hold on moves approaching 0.7140 while now any upward push will likely meet resistance around 0.7230.

The GBP rose against the USD yesterday amidst speculation UK Prime Minister Theresa May will request a delay to the Article 50 deadline, of March 29th. The reason for the delay is due to the lack of time to pass all the pieces of legislation before the deadline. PM May has until Monday to finalise her “Plan B” and return it to parliament.

Later this evening, the Office for National Statistics will release its monthly data on Retail Sales, outlining the change in the total value of inflation-adjusted sales at the retail level. It is the primary gauge of consumer spending, which accounts for most of the overall economic activity. A figure greater than its forecasted rate of -0.8% will be good for the Pound.

The Pound opened at 1.2988 against the USD this morning.

USD indexes traded marginally higher on the day on Thursday as he US government shutdown continued, Morgan Stanley posted disappointing earnings numbers and there was speculation that US president trump might impose tariffs on Auto imports. The USD rose against both the Aussie and the Kiwi, with AUD/USD initially falling 25 points to touch intraday lows of 0.7147 before recovering to 0.7175 later in the session. As markets contemplated the possible Brexit “plan B”, the greenback lost ground against the sterling, seeing the GBP/USD rise 0.7% to touch two month highs at 1.2966 and looks like testing the key 1.3000 handle.

Yesterday’s risk events saw the January Philly Fed Business survey lift to 17.0 to comfortably beat market expectations of 9.5. The read is strong when considering the current backdrop of the recent government shutdown and ongoing global trade tensions. Today’s session sees US industrial production numbers for December which are expected to rise 0.2%. University of Michigan consumer sentiment is also predicted to fall from 98.3 to 96.9 and we also have Federal reserve commentary on the economic outlook due to be delivered by New York Fed President John Williams.

The Euro struggled to find any momentum through trade on Thursday, testing fresh weekly lows and breaking below 1.1375. Persistent softer macroeconomic data sets have plagued the common currency this week forcing investors to reassess their expectations for monetary policy. The Euro has struggled to break outside short term support and resistance handles between 1.1370 and 1.1450 and has tested important technical supports against key crosses breaking below 1.58 (0.6330) against the AUD.

The single currency’s weakness coincides with a broader USD correction and been an important catalyst in propping up the Dollar index. Having depreciated almost a full cent against the dollar this week the Euro has helped stave of a concerted downward push below 95 and the dollar indexes 200 day moving average.

With little of note on the macroeconomic docket today, attentions turn to a raft of data sets next week, headlined by key manufacturing and services PMI and the ECB policy announcement Thursday. A soft read will compound recent concerns, while a dovish statement from the ECB will further dampen markets interest rate expectations.

The CAD has weakened to its lowest level in more than a week when valued against its US counterpart. Thursday saw oil prices fall and domestic jobs data indicate a pullback in the labor market, forcing USD/CAD 0.17% lower at 1.3274. Oil prices were lower due to growing concerns over weakening demand; west Texas fell to USD $51.23 per barrel with brent crude also dropping by the same amount to trade at USD $60.24 per Barrel.

On the technical front, USD/CAD support is seen at 1.3241 before the January 11 low of 1.3173. On the topside, we see first resistance at 1.3313 with a break through this level expected to meet resistance approaching 1.3393.

Expected Ranges

  • NZD/AUD: 0.9410 - 0.9540 ▼
  • GBP/NZD: 1.8825 - 1.9325 ▲
  • NZD/USD: 0.6680 - 0.6830 ▼
  • NZD/EUR: 0.5880 - 0.5980 ▼
  • NZD/CAD: 0.8930 - 0.9020 ▼