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NZ dollar hits three-month high

By OFX

The NZD continues to perform well climbing further overnight to hit a 3 month high of 0.6839 against the USD as it continues to avoid the volatility seen elsewhere. The kiwi has been resilient in the past few trading sessions, evading the negative headlines impacting other major currencies.

This climb follows several data releases that supported sustainable growth in the country, including GDP, CPI and jobs. With the economic calendar looking quiet for the next two weeks, focus is on Brexit with expectations of further drama to unfurl.

The NZD/USD opened this morning at 0.6830.

The Australian Dollar received an unexpected boost yesterday on the back of much better-than-expected October employment data. According to the Australian Bureau of Statistics 32.8K new jobs were added in October, an increase of 42.3K full-time positions, as part-time jobs decreased by 9.5K. The unemployment rate remained steady at 5.0% beating expectations of 5.1%, in spite the participation rate surged to 65.6%.

Looking ahead today and the macroeconomic calendar is empty with no scheduled releases. Attentions remain affixed to ongoing US trade talks.

From a technical perspective, the AUD/USD pair is currently trading at 0.7279. The AUD/USD pair flirted with 0.7300 before pulling back modestly but quickly recovered to settle not far below its daily high of 0.7297. We continue to expect support to hold on moves approaching 0.7235 while now any upward push will likely meet resistance around 0.7315.

Brexit has been the key focus for the market in overnight trading with the Great British Pound plummeting across most of the majors. The Sterling started the session in mostly positive territory, trading above 1.3. The latest Brexit headlines however sent the Pound crashing more than 2% to a new low of 1.2730. Opening this morning at 1.2779, the Sterling is up against the ropes as the deadline for an agreement approaches.

The headlines continue to come in thick and fast with the latest news being on the decidedly negative side for Prime Minister Theresa May. The UK-EU withdrawal agreement that the Cabinet signed off on yesterday failed to achieve wide spread support and triggered a series of ministerial resignations. Notably, the now former, Brexit Secretary Raab and the Northern Ireland Minister Vara. More importantly however is the implications of the resignations as PM May will now have a hard time pushing the deal through Parliament and could face a leadership challenge. From here anything is possible, Article 50 could be extended and a fresh government installed. There could be a hard Brexit on March 29th or even a new referendum on Brexit. Alternatively, PM May might be able to push through her vision of Brexit.

The Market will look to keep a close eye on the Brexit headlines to close out the week with very little else to concern investors.

Overnight we saw the Pound Sterling fall after two British ministers resigned in protest against a draft Brexit agreement. On the back of those two resignations traders flocked into the perceived safety of the Greenback. The US index that tracks the greenback against six major currencies was up 0.18 percent at 96.981. The greenback’s gains were capped following some cautious comments about the economic outlook from Federal Reserve Chairman Jerome Powell overnight.

On the data front yesterday US Retail Sales were up by 0.8% MoM in October, beating expectations of 0.5%, although the September figure was downwardly revised to -0.1%. Unemployment claims for the week ended November 9 were up to 216K vs. the 212K expected. Also, the NY Empire State Manufacturing Index beat expectations by printing 23.3, while the Philadelphia one disappointed with 12.9. Looking ahead today we will see the release of October Industrial Production and Capacity Utilization.

The Greenback has opened weaker this morning aginst the Aussie 0.7279 (0.63%) and Kiwi 0.6827 (0.56%). The US dollar was also down 0.07 percent at 113.54 yen.

The Euro managed to hold its gains in overnight trading, treading water at 1.1330 despite the chaos ensuing across the channel. It did initially follow the Sterling lower to touch 1.1270 but did rebound strongly since then to trade independently.

Brexit dominated market sentiment throughout much of the session with the decidedly negative news of multiple high-profile resignations. The divorce deal now looks uncertain at best with the chance of a hard Brexit significantly higher than yesterday. The Euro fell dramatically on the news but did work its way higher to regain most of its losses.

The Euro now turns to an interesting close to the week with Brexit headlines still dominating market sentiment. The market now also looks to the ECB’s President Draghi’s speech.

The CAD improved over the past few days to just break through the resistance level of 0.76 overnight. The Loonie which is backed by commodity crude oil is facing some volatility due to continued declined in crude oil price action.

Upcoming announcement regarding manufacturing sales is stated to have a moderate impact on the currency, and may further drive the CAD up as the forecast of 0.1% is higher than the figure now. With monthly releases showing changes in manufacturing sales, it can be a leading signal of economic health in the country.

With little macroeconomic data coming up in the upcoming weeks, all focus is on Brexit as the driver of risk appetite and demand for the CAD. The Canadian Dollar opened at 0.7587 this morning.