By Kymberly Martin
The AUD has been the strongest performer over the past 24-hours with good showings also from NZD and CAD.
The RBA left its cash rate unchanged at 2.25% yesterday.
The RBA repeated its view the AUD remains above most estimates of fundamental fair value and that a lower currency is likely needed to achieve balanced growth. But that is nothing new, and the market responded in the first instance to the lack of rate cut at this meeting.
The AUD/USD popped from 0.7760 to 0.7840, the level it trades at this morning. Resistance remains around 0.7910, the top of the currency’s range for the past month.
Overnight, in the absence of other key data releases, Canada Q4 GDP took centre stage. Beating expectations, it resulted in a pop higher in the CAD. From 1.2520 the USD/CAD fell to 1.2440.
Now attention will turn to the Bank of Canada’s rate decision tonight. Consensus now expects the Bank to leave the cash rate at 0.75%.
Whilst trading in most European currencies was fairly uneventful overnight, there was notable strength in the JPY. From 120.20 the USD/JPY has fallen back to 119.40.
Tonight, the US ADP employment report will be watched for a gauge to where the risks around Friday night’s payrolls release lie.
NZD/USD received a boost on the back of the AUD moves yesterday afternoon.
Upward momentum was then maintained overnight, assisted by a steady GDT dairy price auction in the early hours of this morning. Average prices were shown rising 1.1% from the previous event. The NZD/USD trades above 0.7560 this morning. Resistance will likely be encountered on any move toward 0.7610 which marks the highs since mid-Jan. Support is seen around 0.7500.
Unsurprisingly, the NZD/AUD fell sharply on the RBA announcement. However, from early evening lows below 0.9630 the cross has clawed its way back above 0.9650 overnight.
The NZD was notably stronger against its European peers overnight. The NZD/EUR has pushed back up to 0.6760 while the NZD/GBP has rebounded to 0.4920.
With only low-key domestic data on the agenda today the NZD’s fate will likely once again lie across the Tasman. It will likely take its cue from any AUD moves prompted by the release of AU 4Q GDP this afternoon.
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