By Kymberly Martin
NZD
It was a quiet day for the NZD. Overnight, in generally quiet markets the NZD/USD consolidated around the 0.8340 level.
Yesterday, the ANZ commodity prices data showed that world prices for NZ primary produce rose 1.2% in January. The overall gain in January follows seven consecutive monthly declines (from an all-time peak in May 2011). World prices are about the same as a year ago. We think the terms of trade will drift mildly lower over the coming year – from the 37 year high it hit during 2011.
The RBNZ have a 10% drop in the terms of trade factored into its Dec 2011 Monetary Policy Statement.
An absence of a sharp fall in commodity prices is a key strand to our view that the NZD will be fairly well supported on a 12 month horizon.. Yesterday’s data did nothing to undermine that view.
The NZD/USD consolidated its previous gains overnight. It touched 0.8370 early this morning before returning to trade around 0.8340 currently.
The NZD made modest gains on the crosses. It drifted up from 0.7780 relative to the AUD, to trade around 0.7790 currently. Small gains were also seen relative to its European peers.
The NZD/GBP climbed from around 0.5260 to trade just below 0.5280 currently. It appears to have broken previous resistance at the 0.5260 level, technically leaving open a rise toward the 2011 high of 0.5390.
The only NZ data release today is net migration which is unlikely to move the currency.
Elsewhere, the market will await any news from the Greek PSI negotiations.
Majors
It was a day of consolidation in currency markets. All majors currently trade within 0.25% of where they traded at this time yesterday. There was some volatility in the USD and EUR overnight however, with the USD index ultimately strengthening slightly, to 79.00.
Equity markets were flat, to slightly up, overnight as the market appeared to be in “wait and see” mode ahead of any announcement from the Greek PSI negotiations. ECB’s Junker said the Greek PSI talks are “ultra difficult”, though Greece had made “enormous efforts” in the last 2 years.
US data releases had little impact on the market. In comments early this morning, Fed President Bernanke failed to say anything new to move markets.
In this backdrop the USD index chopped around between 78.80 and 79.20, before returning to trade in the middle of this range.
The EUR also showed some messy trading with a general theme of consolidation around the 1.3140 level, where it currently trades.
The GBP capped its steady gains of the past 3 weeks, drifting off from around 1.5850 last evening to 1.5800 currently.
The AUD, NZD and JPY all showed a fairly steady sideways heart-beat overnight. The AUD consolidated around the 1.0700 level. It re-tested the 1.0750 resistance level a couple of times, but failed to convincingly break it.
The JPY consolidated around 76.10, close to its lows, and not far from levels that the Bank of Japan has intervened at, in the past.
The day ahead will bring a slew of Services PMI data, to compliment the Manufacturing PMI seen earlier in the week. AU and China will kick off, with European and US releases tonight. The closely watched US non-farm payrolls will also be released tonight.
No chart with that title exists.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.