By Kymberly Martin
The USD strengthened against all its peers, with the JPY the greatest casualty. The NZD/USD has declined to 0.7070 over the early hours of this morning.
Overnight, OPEC ministers meeting in Vienna announced a deal to limit production. This was the first agreement to cut output in eight years. OPEC will reduce output to 32.5m barrel/day, with producers having individual production cut targets. Non-OPEC nations have also committed to participate. While no small achievement, the proof will now be in the implementation. However, sceptics appear to be won over for now. WTI oil price futures have pushed 9% higher.
The USD has surged, likely assisted by some stronger than expected US data releases and higher yields. The market continues to inch higher its expectations for Fed hikes. While all of the USD’s peers have been casualties, the ‘oil-linked’ NOK and CAD have managed to hold up the best. They are both trading at a similar level relative to the USD as they did yesterday morning.
By contrast the JPY has declined around 1.7% versus the USD. From 112.50, the USD/JPY now trades at 114.30. The last time it was approaching 115 was back in mid-February.
The AUD/USD has come under pressure in the early hours of this morning, in the backdrop of the stronger USD. From 0.7480, it now trades just above 0.7380.
Today’s release of the Q3 AU capex report will likely gain attention. The release of China PMI data also has potential to influence sentiment toward the AUD.
The NZD/AUD has outperformed. From evening lows near 0.9550, the cross now trades near 0.9590. This marks a line of resistance. A break above this level could open up a near-term move toward 0.9700. In coming months we continue to see the cross trading a range in the mid-90s as opposed to sustaining a strong directional trend.
The NZD/USD has also succumbed to USD strength. It currently trades at 0.7080. The 200-day moving average remains an area of potential support, at 0.7043.
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