by Kymberly Martin
NZ Dollar
The NZD/USD sits little changed, at 0.8690, this morning, having traded toward 0.8720 early last evening.
In the absence of crucial data flow, movements in the NZD/USD and crosses have been unremarkable over the past 24-hours.
The NZD/USD pushed a little higher yesterday morning after data showed NZ June net migration at 4,270. This was another huge number.
As such, migration is still riding higher than the RBNZ’s expectations.
It shows no sign of abating in the manner the Bank implied in its June MPS forecasts.
This adds to demand worries for the Bank, especially via the housing market.
It is one factor offsetting other recent developments (dairy price declines, 2Q CPI undershoot) that might imply the RBNZ will soften its tone at this Thursday’s meeting.
Near-term NZD/USD support is seen at 0.8630 while we see resistance on any move toward 0.8740.
The NZD/AUD sits just above 0.9260 this morning. Today, in the absence of domestic data releases the focus may be on a scheduled speech by the RBA’s Governor Stevens, to the Anika Foundation.
NZD/AUD support remains at 0.9230, while resistance will likely be encountered on any move above 0.9300.
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Majors
It was a quiet start to the week for currencies, with majors trading tight ranges. The USD index sits slightly higher at 80.55 this morning.
In an evening light on data delivery, Ukraine headlines continued to dominate news flow. While the US and Europe threaten further sanctions against Russia, President Putin remains defiant, saying the MH17 tragedy should not be used for political ends. Equity markets gave back some of Friday’s gains, with the Euro Stoxx 50 down 0.9% and the S&P500 currently down 0.2%. Our global risk appetite index remains hovering around 78%.
In this backdrop, while the USD was marginally stronger the EUR/USD slipped. From early evening highs around 1.3550 it slipped to trade at 1.3520 this morning.
The GBP was also a little softer overnight. Yesterday UK data showed UK house prices to have fallen 0.8% in July, although still up 6.5%y/y. This morning the GBP/USD trades at 1.7070.
The AUD/USD gave up some of its previous day’s gains to trade at 0.9380 this morning. A focus for the currency today will be a scheduled speech by RBA Governor Stevens (3pm NZT). Although the topic may be high-level economic issues, look out for any references to the currency. The Governor makes no secret of the fact the RBA believes the AUD is still too strong and is impeding the rebalancing of the economy.
Tonight’s focus will be the release of US CPI data. An above consensus delivery would likely be USD supportive as it would prompt the market to bring forward expectations of Fed policy ‘normalisation’. The US Richmond Fed survey and US existing home sales are also due.
In the UK tonight, CBI industrial trends data will be released while EU consumer confidence data is also due.
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