NZD - New Zealand Dollar
The New Zealand Dollar retreated marginally overnight as the Greenback improved slightly against the Bird. Starting the day at 0.6903, the Kiwi went to work consolidating its gains from Monday night and has held above the soft support at 0.69. Intraday trading was a little more lively for the Kiwi than the open suggests with trading oscillating between highs of 0.6918 and lows of 0.6897 although still traded firmly within a tight range. Against the Aussie the Kiwi drifted lower over the past 24 hours to open this morning at 0.9675.
The Kiwi’s drift lower sets the stage for an eventful Wednesday in New Zealand with the RBA set to release their official cash rate and supporting rate statement. While the cash rate is widely expected to remain unchanged the market will keep a close eye on the RBZ’s statement for clues on their thinking. Alarmingly, domestic rate markets saw the yield curve flatten again in New Zealand adding to fears that a recession is on the table and heightening the importance of this months RBNZ release.
US equities and bond yields moved slightly higher over the past 24 hours as fears of a recession retreated. This did translate into positive moves for the Greenback which saw an appreciation of 0.18% to 96.81 on the US Dollar Index. In contrast to the improvement in risk appetite were some disappointing economic releases in the worlds’ number one economy. The Conference Board’s measure of consumer confidence fell sharply while the survey’s labour market differential also fell, signalling some softening in the labour market. Housing starts also dropped sharply while building permits came in slightly weaker than expected. Overall, the data reinforces the view that US economic activity has started to slow. The Federal Reserve’s Rosengren also acknowledged the softening suggesting that Q1 GDP was likely to be “pretty weak” but said growth remains on course for 2-2.5% for the year. Rosengren cited concerns over Chinese and European growth as key risks in the global economy. We expect further short-term Greenback weakness.
The Great British Pound also remains firmly in the spotlight as Brexit continues to roil markets. There was some marginal improvement for the Sterling overnight as key Brexiteer Jacob Rees-Mogg signalled he might support Theresa May’s deal. Yesterday morning, parliament voted 329 to 302 to hold a series of indicative votes on Brexit options to try and break the Brexit impasse. Votes will however be non-binding for the government but the idea is that it will reveal an option that the majority of Parliament will support. Rees-Mogg took the vote to suggest that it will boil down to a vote between May’s deal or not leaving at all and suggested some Brexiteers may move to support May’s deal which buoyed the Pound moving into Wednesday. All eyes in the UK remain fixed on the Brexit headlines. Across the channel the Euro continued to struggle and moved 0.2% lower overnight. In Europe, the focus now shifts to ECB President Draghi’s speech scheduled for later this evening.
0.6823 - 0.7045 ▲NZD/AUD:
0.9574 - 0.9726 ▲GBP/NZD:
1.8904 - 1.9795 ▼NZD/EUR:
0.6073 - 0.6317 ▲NZD/CAD:
0.9082 - 0.9395 ▲