By Kymberly Martin
The USD opened higher on the week, but has subsequently declined. European currencies have outperformed. The JPY has been the weakest performer.
Global markets continue to trundle along. Our risk appetite index (scale 0-100%) remains at a fairly steady 62%. The WTI oil price, at USD52/barrel, is pushing at the top of its range of the second half of the year. Equity markets have provided positive returns on either side of the Atlantic overnight, led by cyclical sectors. The S&P500 is sneaking up toward an 8% gain for the year.
The “No” result from the Italian referendum, failed to have a lasting impact on the EUR, as it had been widely anticipated. After touching lows near 1.0510, the EUR/USD has now traded up to 1.0740. Meanwhile the USD index now sits below Friday’s close.
The JPY was again under pressure overnight. However, the USD/JPY again found resistance approaching the 115 level. It has pulled back to trade at 114.00. Still, it has strengthened around 11% since early November.
The NZD/USD experienced a bit of volatility as NZ Prime Minister Key (ex-fx trader) announced his surprise resignation. However, the impact was short-lived. The NZD/USD has twice traded toward 0.7070 over the past 24-hours before rebounding in the early hours of this morning. It is now pushing toward 0.7150. It will likely encounter resistance on a move up toward 0.7200. The 200-day moving average will provide support at 0.7050.
On the crosses, the NZD has made further gains against the JPY. The NZD/JPY now trades at 81.40, its highest level since early January this year.
The AUD has also pushed forth in the early hours of this morning. From early morning lows below 0.7420, the AUD/USD now trades at 0.7490. The 200-day moving average sits a little higher at 0.7529. Today the RBA will meet, although no change of policy is expected. More important may be tomorrow’s release of AU Q3 GDP. Our NAB colleagues are expecting a small negative outcome (-0.2%), a bit weaker than consensus (+0.2%).
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