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Kiwi soars 0.7% to be best performing currency

By OFX

The New Zealand Dollar is the top performing currency over the past 24 hours, opening this morning at 0.6831 after rising an impressive 0.7%.

The main impetus for the move was a much weaker than expected US retail sales report which saw the Greenback weaken across the board. Additional movements for the Kiwi came from investors continuing to recalibrate their positions after the RBNZ monetary policy statement released earlier in the week. The new RBNZ remit is essentially unchanged from the current policy targets agreement. The NZD was also encouraged by the release of new monthly data of rents which suggests a modest boost to NZ inflation.

Friday appears to be much less exciting than earlier in the week for the Kiwi. Nevertheless, the New Zealand Dollar will keep a close eye on the headlines as well as Chinese CPI and PPI data due for release today.

On what is meant to be a day of love, the AUD saw none as it lost it’s gains throughout the day to fall from from 0.7123 at its highest, to open at 0.7112 against the USD this morning. Much of this slide can be owing to the stronger USD as US CPI data this morning came back solid and better than it’s previous rate. The Australian Dollar was also softer following a positive report regarding Chinese trade balance coming in at 271B compared to it’s forecast of 241B. The Australian Dollar can also be further clipped with additional Chinese CPI and PPI data released midday today.

In terms of macroeconomic news directly relating to the AUD, the Reserve Bank of Australia is releasing it’s monetary policy meeting minutes next Tuesday morning. Showing a detailed record of the RBA’s most recent meeting, this can provide in-depth insights into economic conditions that influenced their decision on where to set interest rates.

The Great British Pound continued to slide overnight as the Great British Pound opened at 1.2845 on Thursday morning. Slipping 0.4% overall for the day, the Sterling was one of the worst G10 currency performers and hit a one month low of 1.2772 following another Brexit vote loss in parliament.

Media leaks suggested that Prime Minister May would lose the latest motion in voting overnight causing the Sterling to drop from 1.2873 at the start of the Uk session to one-month lows previously stated as PM May continues to renegotiate better terms with the European commission.

Cable has steadied this morning and is trading at the 1.2800 handle

The US Dollar index has zigzagged its way through Thursday trading session, despite a drop in US Retail Sales the DXY moved within a tight range of 96.95 and 97.29. The Commerce department reported that retail sales fell 1.2% last month which was its biggest drop since 2009. Economist had forecasted a rise of 0.1%.

In other news U.S Producer Prices also down for a second straight month in January leading to the smallest annual increase in 1-1/2 years, the latest sign of benign inflation that could allow the Federal Reserve to be patient about raising interest rates this year. The Producer Price Index for final demand dipped 0.1 percent last month as the cost of energy products and food fell. On the employment front, Initial jobless claims edged up from a revised 235k to 239k for the week ending February 9. The four-week moving average spiked to 231.8k.

While there are signs of weakness in the US economy, concerns more globally and risk aversion is providing the US dollar with support.

Looking ahead the U.S. is to round up the week with the Empire State manufacturing index, a report on industrial production and preliminary data on consumer sentiment.

The Euro opened again this morning just below the 1.1300 level. Overnight the Euro gained against the Greenback on Thursday after a report that U.S. retail sales recorded the biggest drop in more than nine years in December, suggesting a sharp slowdown in economic activity at the end of 2018.

On the release front yesterday Germany’s economy stalled in the fourth quarter of 2018. Germany, reported no quarterly growth in the final three months of 2018, compared with a modest growth expectation of 0.1%. Year-over-year, the gross domestic product expanded by 0.9%. Meanwhile for the EU, growth reached 0.3% in the three months to December, better than the 0.2% expected.

From a technical perspective, the EUR/USD pair is currently trading at 1.1295. We continue to expect support to hold on moves approaching 1.1260 while now any upward push will likely meet resistance around 1.1310.

The Canadian Dollar enjoyed a rollercoaster Thursday to ultimately open slightly lower against its US counterpart. Starting today’s Asian session at 1.3297, the Loonie initially fell to a low of 1.33318 before finding its feet after poor US retail sales later in the session.

The Loonie started Thursday under heavy selling pressure after a disappointing miss from manufacturing sales data. Statistics Canada had reported that manufacturing sales declined 1.3% in December after falling 1.7% in November. The selling pressure led to a low of 1.33318 for the Canadian Dollar which fortunately benefitted from another data miss south of the border. US retail sales contracted 1.2% on a monthly basis in December which saw the Loonie rise to open this morning at a healthier 1.3297.

Moving into Friday the Canadian Dollar is set to enjoy a quieter day on the economic calendar.