Immigration net annualised gain of 56,000 exceeds previous highs in 2002/03; EUR weaker as ECB commences asset purchase program; AUD surges on Chinese data

By Kymberly Martin

NZ Dollar

Despite pushing higher intra-night, the NZD/USD trades at a similar level to yesterday morning, at 0.7980.

Yesterday’s NZ net migration figures confirmed the immigration boom remains intact. September recorded a net gain of 4,670, for an annualised rate of 56,000. This may be close to the biggest gain ever, exceeding the strength of the 2002/2003 period.

But it was not until later in the afternoon that the NZD really responded to data. This came in the form of Chinese releases. The better than expected tone of data saw a small pop in the NZD/USD, but a sharp fall in the NZD/AUD.

However later in the night, the NZD/AUD move was reversed, as the NZD/USD made a couple of determined assaults on the 0.8000 level. Resistance held however, and the NZD/USD has returned to trade at 0.7980 this morning. The NZD/AUD sits at 0.9060.

The NZD strengthened against a weaker EUR overnight, as the ECB began its asset purchase program and the market speculated about further stimulus. The NZD/EUR trades at 0.6260 currently.

Today, there are no domestic data releases scheduled, although a workshop by the RBNZ on macro-prudential tools will not go unnoticed (see Fixed Interest). Crucial resistance for the NZD/USD remains just above 0.8000. Support is eyed toward 0.7910.

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Majors

The USD strengthened against its European peers overnight. The CAD was the key outperformer.

The EUR weakened overnight as the ECB began its asset purchase program. It was reported the Bank had bought Italian covered bonds. Reports also suggested the ECB is considering purchasing corporate bonds. The prospect of further policy stimulus helped the EUR/USD decline. It trades just above 1.2720 this morning.

In the US, focus remains on the S&P500 Q3 earnings report season. So far, around 80% of companies have beaten (reduced) earnings expectations. Attention overnight was on upward revisions to Apple’s revenue forecasts.

US September existing home sales also beat expectations, rising to their highest level in a year, at 5.17m. The USD index strengthened against its European peers, to sit above 85.20 this morning.

Meanwhile, the AUD surged higher yesterday afternoon, after the release of Chinese data. These showed Q3 GDP at 7.3% (7.2% expected) and September industrial production at 8.0% (7.5% expected). The AUD/USD popped from 0.8770 to 0.8800 on the results. Although it pushed a little higher overnight it has returned to trade at 0.8800 currently.

Tomorrow, attention will remain with China as the October reading of the HSBC Manufacturing PMI is due for release. Today’s domestic focus for the AUD will be the release of Q3 CPI. Our NAB colleagues expect the data to show little inflationary pressure in the economy, to worry the RBA. Yesterday’s RBA Minutes showed the Bank to be firmly on hold, but still concerned about the investor housing market.

Tonight, the Bank of England’s Minutes will be released along with US CPI data. The Bank of Canada will also meet and is widely expected to keep its cash rate at 1.0%.

All its research is available here.