by Kymberly Martin
NZ Dollar
The NZD/USD has traded a fairly tight range over the past 24-hours to sit at 0.8550 this morning.
Yesterday’s data showed a record NZ trade surplus for March. Exports were shown to be booming while imports were also rising.
The current account deficit looks set to narrow further to 2.8% in Q1. However, the data does nothing to change our forecast for 1.0% Q1 GDP growth.
The NZD/USD showed little response to the data, nor to yesterday morning’s monetary policy announcement from the Labour Party (opposition party).
Having touched lows below 0.8520 early last evening, the NZD/USD traded higher overnight to sit at 0.8550 currently.
On the crosses, the most notable move was on the NZD/EUR. After the release of softer-than-expected German CPI data, the NZD/EUR strengthened. From intra-night lows close to 0.6140 this cross now sits above 0.6190.
Meanwhile the NZD/AUD has traded a relatively tight range over the past 24-hours, sitting just below 0.9230 this morning.
Today brings the domestic data highlight of the week, in the form of the ANZ business survey. Its highly elevated growth indicators can afford a correction without raising concern.
The RBNZ may be more closely watching for further increases in the survey’s pricing intention variables, as pre-cursors to inflation.
Near-term support for the NZD/USD remains in the 0.8500-0.8510 region. Resistance is eyed at 0.8590.
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Majors
There was data-derived volatility in European currencies overnight. The USD index sits higher at 79.80 this morning.
Equity markets on both sides of the Atlantic enjoyed a rebound overnight despite the situation surrounding the Ukraine remaining tense. The EU has widened sanctions against Russia following the similar recent move by the US. But the Euro Stoxx 50 managed to close up 1.3% and the S&P500 is currently up 0.5%.
Meanwhile European data releases were a key driver of currency moves overnight. First up, the UK released Q1 GDP at 0.8%q/q (0/9% expected), to be up 3.1% y/y. The GBP/USD that had crept higher in anticipation of the release, gapped from 1.6840 toward 1.6790 afterward. Subsequently it found its composure and traded back up to 1.6830 currently.
Later in the evening German CPI data was released. This showed April CPI at -0.2%m/m (-0.1% expected) to be down 1.3% y/y. The EUR/USD dropped from 1.3860 to trade at 1.3810 this morning.
As a result, the USD index strengthened. From around 79.65 prior to the German data release it has traded up to 79.80 currently.
The AUD is a little stronger this morning, at 0.9270. Today AU private sector credit numbers will be released for March. We expect a continuation of recent trends. Moderate growth in credit will be composed of steady housing credit growth while growth likely remains anaemic in ‘other personal’ and business credit. Our NAB colleagues look for a 0.3% m/m outcome down from 0.4% previously.
Tonight, the US ADP employment report will be delivered which is often seen as a precursor to Friday’s all-important US payrolls report. The advanced reading of US Q1 GDP will also be released.Early tomorrow morning (NZT) the US FOMC will announce its monetary policy decision. A further $10b ‘tapering’ of asset purchases is unanimously expected.
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