by Kymberley Martin
NZ Dollar
The NZD traded a relatively tight range over the past 24-hours, to sit at 0.8640 this morning.
After the previous days’ sharp falls the NZD/USD eased into a steady range of trading yesterday. There was little on the domestic data agenda. Even heavy selling of the NZD/AUD, following the strong AU employment report, was unable to throw the NZD/USD off course.
Finding its composure around the 0.8640 level yesterday morning it has dabbled around this level since. The RBNZ will likely be disappointed the resilient NZD did not extend losses that ensued post the mention of ‘intervention’.
The NZD/AUD that was knocked lower after the AU employment report, then continued to drift lower overnight. It sits at 0.9220 this morning. Crucial support is now eyed around 0.9160, which has marked the lows for the cross since the start of the year.
There was significant volatility in the NZD/EUR overnight. This occurred around the ECB’s policy announcement and subsequent press conference. From intra-night lows around 0.6180 the NZD/EUR now sits at 0.6240.
Today NZ crown financial statements and electronic card transactions will be released, although neither is likely to be a key influence on the NZD. For now, NZD/USD support is seen approaching the 0.8600 level.
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Majors
The AUD was amongst the strongest performers and the EUR the weakest, over the past 24-hours.
Equity markets eked out further positive returns overnight, as our global risk appetite index (scale 0-100%) inched up to 72%. This was despite separatists in the Ukraine’s Donetsk region stating they would proceed with a referendum.
Meanwhile on the Central Bank front, ECB President Draghi managed to steal the limelight from Fed Chair Yellen. Testifying to the Senate, Yellen largely reiterated her previous day’s messages. However, with reference to US Treasury yields she did specifically say; “Interest rates are unlikely to begin rising until we are in a strong economic recovery”.
But it was ECB President Draghi’s comments that inspired the greatest currency response. Initially, as the ECB left rates unchanged the EUR surged higher, reaching toward 1.4000. However, it fell sharply soon after, as Draghi said the exchange rate was a “serious concern”, and the Bank stands ready to act “next time”. The EUR/USD now sits at 1.3860.
The result was that the USD index was catapulted from intra-night lows close to 78.90 to its current levels above 79.30.
The best performing currencies however were the CAD and the AUD. The AUD was launched higher yesterday afternoon after a stronger than expected AU employment report. While the participation rate remained steady, 14.2k jobs were added (8.8k expected) and the unemployment rate fell from 5.9% to 5.8%. The AUD/USD popped from 0.9320 to sit at 0.9370 this morning. Today the RBA will release its statement on monetary policy.
The UK will be in the spotlight tonight with the release of the UK trade balance, industrial production and the NIESR GDP estimate for April. Still, with the GBP/USD close to five year highs, at 1.6940, data will not easily inspire further gains.
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