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NZD reaches one week highs

By OFX

The NZD climbed overnight, hitting a one week high of 0.6806 against the USD earlier this morning. This gain was enough to push the NZD at the top of the G10 leader board given the volatility in other major currencies.

With a lack of macroeconomic data available in the near future for the NZD, all eyes will be on the ongoing United States and China trade talks as it continues to boost risk based currencies such as the Kiwi. The expectation for the NZD is to potentially rise as long as investors remain optimistic over upcoming developments.

The New Zealand Dollar opens this morning just below the US 68 cent handle.

The AUD dropped below the 0.72 cent handle amidst official wage data released yesterday. The quarterly adjusted data came in at the previously forecasted 0.6%, lifting the annual wage growth to 2.3 per cent and pushed the AUD lower, dropping below the 0.72 handle to 0.7190.

Broader direction and focus remains with ongoing the US and China trade relations. As delegates discussions develop we continue to see Yuan volatility influencing AUD flows. The Aussie continues to hold a negative tone, trading close to a week-long low holding only marginally above the support at 0.7170.

Immediate attention turns to announcements coming out today regarding the Australian Bureau Statistics monthly releases of employment change and unemployment rate. Forecasts are expected to come in at 15,000 for employment change with unemployment holding firm at 5.3%. With analyst pricing in little change a print well beyond forecast growth may dramatically shift the expectations for the RBA’s next stance on interest rates. The major release has the potential to generate volatility for the AUD and may be the catalyst that helps the embattled unit extend the recent upturn.

The Australian Dollar recovered in the North American session and has opened strong this morning at 0.7230.

The Great British Pound continued to see heightened volatility overnight as Brexit headlines dominate proceedings in market movements this week. The Pound dove to overnight lows of 1.2885 on numerous occasions as British Prime Minister Theresa May cancelled her press conference as positive outcomes were dashed of a Brexit deal.

Sterling was put under further pressure as U.K Inflation was steady at 2.4% after it was widely expected that CPI would increase to at least 2.5%. Policy makers expect the Bank of England will need to consider interest rate increases in the future to pull inflation back to its 2% target range.

Cable rallied this morning to eventual highs of 1.3065 following news that the Northern Irish DUP party may support the Brexit deal after an announcement on Sky News.

GBP/USD eventually settled on even pairing at the 1.3000 handle after a day of oscillating wildly and investors look towards this evenings UK retail sales release for the month of October.

The US Dollar has remained steady overnight following the release of United States inflation figures for the month of October. The Dollar Index (DXY) remained flat, slightly above 97.00 as the Consumer Price Index increased 0.3% in October on a seasonally adjusted basis after rising 0.1% in September.

Despite consumer prices increasing to its highest level in nine months, on an annualized basis core inflation fell to 2.1% in October vs expectations of 2.2%. The US Dollar Index fell off overnight highs of 97.40 following the release to settle at 97.15.

Eyes will be focused on Federal Reserve Chairman Jerome Powell’s speech this morning who is due to speak in Dallas on “Global Perspectives”. Participants will be looking for any further clues to changes to its current rate-hike cycle as markets is currently pricing a 72% chance of its next hike in December, falling from its peak of 78% last month.

The Euro saw positive movements overnight against the greenback as Brexit headlines continue to dominate Northern Hemisphere markets. A relatively volatile evening saw the EUR/USD see lows of 1.1262 following a less than positive reading for the European region Industrial Production figure for the month of September as production fell by 0.3%.

Furthermore, Italy has refused to revise their domestic budgets as the Government of Italy has told the European Union it will move ahead with current plans of 2.4% of GDP next year with plans to sell state owned assets to reduce debt to 126% of GDP in 2021.

Fresh highs overnight were reached of 1.1342 following a pullback by the greenback from 16 month peaks as core inflation failed to reach expectations in the United States. With the focus squarely on a positive Brexit deal, the EUR ended the day marginally higher 0.1% and opens this morning at 1.1315.

Investors looks towards Trade balance figures this evening and a speech by ECB President Draghi at the Frankfurt European Banking congress to round out the week.

The Loonie remained steady through trade on Wednesday after remaining in a narrow range between 1.3210 and 1.3255 against its American counterpart. Movements were slightly higher for the USD/CAD currency pair with a lack of data on the domestic front meant the Canadian dollar took its cues from offshore events and commodity prices.

WTI Crude was up just 1% on hopes of a production cut by OPEC after plummeting yesterday by 7% in one day and falling to its lowest dip since 2015.

The USD/CAD opens this morning at 1.3242 ahead of Canadian Non-Farm Employment figures due for release this morning.