By Kymberly Martin
The USD ran out of steam overnight. The ‘oil-linked’ CAD and NOK have continued their outperformance. The NZD has been amongst the weaker performers over the past 24-hours.
The global oil sector remained in the driving seat overnight. A further 4% rise in WTI oil price futures lent itself to higher US yields, the outperformance of energy sectors within the equity market and outperformance of ‘oil-linked’ currencies. For example, while the S&P500 is currently down 0.2% the energy sector is up 2%. The NOK and CAD have both gained almost 1% against the USD since yesterday morning.
Despite the further rise in US yields overnight, the USD could not maintain the previous day’s upward momentum. The USD index sits a little lower this morning. Even the USD/JPY has failed to make further gains. It remains at a similar level to yesterday morning, around 114.50.
The GBP/USD pushed higher in the early hours of this morning, subsequently giving back some of the gain. The initial surge appeared to coincide with comments from ‘Brexit’ secretary, Davis, that the UK would consider making contributions to the EU in order to secure the best access to the single market. The GBP/USD touched highs near 1.2700 in the early hours of this morning, its highest level since early-October. It is a reminder of how sensitive the currency remains to the twists and turns of what will be a protracted ‘Brexit’ process.
The AUD/USD experienced a brief dip alongside the release of softer than expected AU capex data yesterday. However, it didn’t last long. Subsequently it has traded a range between 0.7370 and 0.7420. Currently it sits at 0.7400. AU retails sales data will be in focus today.
The NZD/AUD has given back all of yesterday’s outperformance. It was again unable to break through resistance near 0.9600 in the early hours of this morning. It has subsequently dropped back to trade at 0.9540.
The NZD/USD has dribbled lower since last evening. From 0.7100, it now trades very close to the 200-day moving average at 0.7045. There is little scheduled on the domestic agenda today to move the currency. This evening US payrolls will be released, but may lack their usual influence.
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