The NZD has held its ground against the majors with the exception of the JPY over the last 24 hours after as number of releases failed to provide a strong direction to trade.
The local business day was dominated by Australian announcements which have again highlighted the country’s economic strength. Business confidence rose by three points to a seven year high of 19. The trade balance figures for October also beat forecasts coming in at $16.2 billion.
Overnight the news was not so encouraging though as the major credit agencies sounded warnings on sovereign debt levels. S&P recently released a warning that Greek banks were the riskiest in Western Europe and this has been backed up by Fitch which reduced Greece’s rating from A- to BBB+. Not to be left out Moody’s released a statement saying that fiscal crises in the developed economies could drag on for “several years”. The data increased risk aversion which benefited the USD at the expense of the EUR.
Tomorrow morning the RBNZ will release their decision on interest rates. The bank has been at pains to underline it commitment to keeping rates low for some time now so no change is expected.
• 09 December 09: AU Trade Balance (Oct)
• 09 December 09: NZ Card Spending (Nov)
• 09 December 09: JP GDP (QIII)
• 10 December 09: AU Employment Rate
• 10 December 09:NZ RBNZ OCR
By Sam Spink - McCarthy, Corporate Dealer
]]>The Kiwi opens today down from yesterday morning after a choppy day’s trading driven by the market’s attempts to rebalance after Friday’s US jobs data.
The Kiwi remained under pressure during yesterday’s local session, with the improved chance of an interest rate rise in the US pulling back demand for the high-yielding currencies. The local focus is well and truly on Thursday’s RBNZ announcement, with all 19 forecasters in the latest Reuters poll picking the rates to stay on hold – with the first raise still expected in Q2 next year. An announcement yesterday from the Treasury department did nothing to help the Kiwi’s position either, with the department’s report stating that NZ’s economic recovery may struggle to maintain momentum. Citing recent sharp declines in imports, the release pointed to further subdued domestic consumption and investment. A slowing of the NZ recovery would reduce the pressure on the RBNZ to raise interest rates, and whilst the market didn’t react strongly to the news at the time, it placed a greater focus on the RBNZ’s decision, and more specifically, the accompanying statement.
The USD continued to bask in jobs data afterglow overnight, with the currency hitting a five-week high against the EUR, and gaining strongly against the JPY. Profit taking held back the gains to a degree (as we always see when the market makes a major jump), as did the natural December unwinding of positions as traders head into the holiday season and year end, but it’s still been a very good 24 hours for the USD. The focus has now shifted to next week’s Fed meeting, and whether this good news will lead to a shift of the Fed’s policy outlook. The likelihood is that the Fed will still downplay their recovery expectations – as evidenced today by Chairman Bernanke cautioning that the US recovery rate remains fragile. Speaking in Washington, Bernanke stated that the US still has “some ways to go before we can be assured that the recovery will be self-sustaining” and that the Fed was still looking to hold rates for an “extended period”.
Whilst we have some important data coming out in the next couple of days, the market will likely still be dominated by the changing fortunes of the US economy, with Thursday’s RBNZ announcement being the next item of major local significance.
• 08 December 09: AU NAB Business Confidence
• 08 December 09: NZ Manufacturing Activity (QIII)
• 09 December 09: AU Trade Balance (Oct)
• 09 December 09: NZ Card Spending (Nov)
• 09 December 09: JP GDP (QIII)
By Chris Hunter, Corporate Dealer
]]>The Kiwi had a mixed weekend - staying steady against most of the majors, but slipping back against a broadly stronger USD.
Friday’s local session was dominated by investor uncertainty ahead of the evening’s non-farm payroll report. With expectations split, the investment community chose to adopt a wait-and-see approach and the resulting lack of participation saw the Kiwi unable to move from its opening levels.
And the data was worth the wait… according to the official US Labor Department release the US economy only shed 11,000 jobs in November. The surprisingly low number shocked the market (the expected result was approx 130,000 jobs lost) and combined with a positive revision of September and October’s figures by 159,000 jobs, gave a suddenly bright picture of the US economy. Normally this sort of news would embolden the investment community towards risk and the Kiwi would benefit, but the overwhelmingly good news actually strengthened the USD. Speculation arose immediately that the Fed may be forced to raise US interest rates sooner than expected, and the USD gained accordingly.
We have another busy week for data this week – none more so than Thursday’s RBNZ interest rate announcement. Whilst they’re likely to keep interest rates on hold and repeat their recent mantra (rates kept low until second half of 2010), the possible hastening of the US’s recovery has thrown an interesting cat amongst the pigeons.
• 08 December 09: AU NAB Business Confidence
• 08 December 09: NZ Manufacturing Activity (QIII)
• 09 December 09: AU Trade Balance (Oct)
• 09 December 09: NZ Card Spending (Nov)
• 09 December 09: JP GDP (QIII)
By Chris Hunter, Corporate Dealer
]]>The Kiwi opens today broadly stronger, as a combination of factors and releases has seen the investment community’s mood brighten.
The local session saw the Kiwi stay steady, as the market held back ahead of the late afternoon RBA announcement. As the analysts expected the RBA raised Australian interest rates by another 25bp, taking the rate to 3.75%. The AUD gained on the announcement, as investors were naturally happy with the news, and the Kiwi was pulled along for the ride. Surprisingly the Kiwi also gained against the AUD, though this was more from investors taking profits after the Kiwi’s recent lows than anything positive happening locally.
On the flip side the JPY has had a rough 24 hours, as an emergency Bank of Japan meeting saw them announce they were going to pump an extra 10 trillion yen into the Japanese banking system. The move is a form of quantitative easing and designed to combat the strength of the JPY (which has recently hit 14-year highs against the USD) and the market reacted accordingly by pulling the JPY down.
Overnight the USD gave up more ground as worries about the Dubai situation continued to subside. With a debt-restructuring plan outlined yesterday for developer Dubai World the chance of a credit market melt-down seems very unlikely, and the investment community tentatively started looking at risk again. More positivity was added when the release of the ISM data showed that the US manufacturing sector had grown for the fourth straight month in November. Wall St gained on the news, and the combination of this with the RBA’s announcement saw the Kiwi and AUD push higher.
Today sees another busy day on the markets – we’re off to a good start with the latest Fonterra auction showing that dairy prices have risen by a further 3.6%, a number that will hopefully underpin the Kiwi’s recent gains. Overnight we have the US precursor to Friday’s non-farm payrolls, with the ADP employment report, as well as the Fed’s ‘unofficial’ analysis of the economy in the Beige book.
• 02 Decmeber 09: EZ GDP Q3
• 02 December 09: US ADP employment data (Nov)
• 02 December 09: US Fed Beige book
• 03 December 09: AU Retail trade (Oct)
• 03 December 09: EZ Retail sales (Oct)
By Chris Hunter, Corporate Dealer
]]>After a lacklustre trading session an unprecedented 25bp hike by the RBA for a third month in a row did little to support the aussie as it was sold off post announcement. Non bullish comments coupled with a lack of urgency for the next rate hike weighed on the battler in the domestic session. Domestic Interest Rates have risen to 3.75%.
As the Dubai World woes from earlier in the week subsided and data from the US overnight was surprisingly upbeat, the safe haven allure of the Greenback diminished. Equity markets gained across the board extending a global rally as markets waded back into riskier trades. The local unit received a boost from higher commodity prices and a weaker US dollar to open above 0.9200 this morning. Gold prices made a dash overnight to break the psychological level of $1200 an ounce spurred on by the commodity rally and figures showing Chinese factory output grew at the fastest pace in five years.
The Central bank of Japan unveiled a plan overnight to provide short term loans to banks as they struggle to combat falling prices and the Yen’s surge to 14 year highs. The Central bank will set aside 10 trillion yen ($115 billion) for three month loans at 0.1%.
Following on from solid gains in equity markets overnight, Australian equities will likely follow suit with the local unit to test resistance at 0.9250 and then below 0.9300 against the US dollar. Tonight will see employment change data for the US released. Typically a weak figure for the states a flight to quality could be seen if figures are worse than expectations.
By Michelle Dri, Senior Corporate FX Dealer
]]>The Kiwi struggled overnight, unable to push on from its local session gains as investors remained cautious over the potential effects of Dubai’s debt problems.
Following on from Friday night’s rebound, yesterday saw the Kiwi push higher as the panic over Dubai settled. The United Arab Emirates central bank tabled an offer to assist bank liquidity in Dubai, and the market responded with relief, with equity markets and the high-yield currencies benefiting. The Kiwi’s gains were capped however, as the NZIER released rather gloomy predictions for the local economy’s future, with growth expectations likely to stay ‘patchy’ in 2010. Citing continued risks from a renewed over-valuation of the housing market, rising unemployment and persistent imbalances in our trading partners’ economies, the economic think tank predicted that we were entering a stabilisation period, where improvement would be minor at best. They also indicated that the conditions would give the RBNZ breathing space to keep rates low well into next year, with their prediction that September would see the first of any rate rises.
Overnight saw the USD lose ground against the EUR and JPY as the easing concerns about Dubai saw investors start to look elsewhere. However, the jitters still remain in the investment community, and the flow of money didn’t carry through to the ‘risky’ currencies like the Kiwi and AUD. Instead, the anti-USD sentiment saw the money moved to the other majors, with the JPY holding near the 14-year high it hit last week against the greenback. Whilst the USD is down, risk has well and truly been taken off the table…
Today is a busy one on the release front, with the biggest announcement being the RBA interest rate decision. The majority of analysts expect a 25bp rise to be announced, though the market remains unconvinced with key measures showing a 50/50 chance. The RBA has been very bullish on the long-term outlook for the Australian economy, and as they don’t meet in January they’ll have to wait two months if they don’t move now. Given the market’s indecision expect today’s trade to be choppy, and the Kiwi to likely stay under pressure from the newly risk-adverse investment community
• 01 December 09: AU Building Approvals
• 01 December 09: AU RBA Interest Rate decision
• 01 December 09: US ISM Manufacturing (Nov)
• 01 December 09: US Pending Home Sales
By Chris Hunter, Corporate Dealer
]]>A fresh round of good news has boosted risk acceptance overnight and the Kiwi has made ground against the major currencies.
The big economic release for the night was on existing home sales in the US over October and the annualized 10.1% increase didn’t disappoint. Elsewhere a survey of European purchasing managers in the service sector and Canadian retail sales data also beat expectations.
Central bank officials also got in on the act. A representative from the St. Louis branch of the Fed spoke in support of a prolonged period of low interest rates and an extension to the mortgage-related assets purchase program. In contract ECB President Jean-Claude Trichet openly discussed the European economic situation returning to normal and winding down the banks quantitative easing measures.
The increase in overall optimism saw the NZD rise along with other risk sensitive instruments although we are still well within the low US 70 cent range.
• 24 November 09: GE IFO Business climate
• 24 November 09: EZ Industrial new orders
• 24 November 09: US GDP
• 25 November 09: US Durable goods orders
• 25 November 09: Minutes of Nov FOMC meeting
By Sam Spink - McCarthy, Corporate Dealer
]]>A quiet end to the trading week saw the NZD/USD rate continue to slip lower on Friday night and we open today below the USD 0.7250 cent level.
No change in German PPI and the Bank of Japan doing the expected by announcing no change in interest rates were not enough to provide meaningful direction. The lack of fundamental releases let sentiment guide market activity and the prospect of a slow week this week weighed on price action. Japan will be closed on Monday and Thursday will be Thanksgiving holiday in the US. The temptation to have a four day weekend is expected to get the better of most US workers lowering expectations for Friday trading as well.
The main local data releases are also due at the end of the week. We will have NBNZ business Confidence results out on Thursday and the latest trade balance and inflation expectations numbers out on Friday.
• 23 November 09: US Existing home sales
• 23 November 09: US Chicago Fed Activity Index
• 24 November 09: GE IFO Business climate
• 24 November 09: EZ Industrial new orders
• 24 November 09: US GDP
By Sam Spink - McCarthy, Corporate Dealer
]]>The Kiwi opens today higher against the majors, after positive US data provided an welcome boost to risk appetite.
The local session saw the Kiwi once again stuck in the doldrums, trading within a tight range as a lack of major local data saw the investment community happy to stay put. There was a brief drop on the back of Producer Price Index release, as the data showed prices fell more than expected in Q3. The figures showed a lack of any real inflationary pressures, reinforcing the RBNZ’s view that interest rates will be held low until the second half of next year. However an overriding feeling of positivity towards the equity markets saw the Kiwi quickly regain its lost ground, though again it was unable to move beyond its recent resistance point.
The news improved overnight for the Kiwi, as a better than expected US retail sales figure gave fresh impetus to the equity markets, pushing the Kiwi to its current levels. October’s retail sales grew by 1.4%, which was seen as a welcome sign heading into the holiday season – especially given September’s 2.3% drop. Wall St breathed a sigh of relief, and the investment community resumed its punishment of the USD – whilst the results were good, they weren’t spectacular, meaning the Fed’s outlook for US interest rates won’t change (i.e. they’re staying low for a long time). Comments from Fed Chairman Bernanke that the US central bank is attentive to changes in the USD were dismissed as more jawboning by investors and quickly discounted as they ran back to high yielding assets and currencies.
Today’s major release is the RBA minutes from their November meeting and analysts will be searching for signs that Australian interest rates might be put up once more this year. The RBA has traditionally been loath to change rates in December, and with no meeting in January it’s likely that nothing will change until February… but that won’t stop the speculation!
• 17 November 09: AU RBA Minutes
• 17 November 09: EZ Trade balance
• 17 November 09: US PPI (Oct)
• 18 November 09: UK BOE minutes
• 18 November 09: US CPI (Oct)
By Chris Hunter, Corporate Dealer
]]>Friday night trade was good for the kiwi and we posted gains against all of the majors despite some mixed offshore data.
In the States the University of Michigan survey of consumer sentiment came in well short of expectations at 66.0 and the trade balance also widened by 18.2%. The weak USD would usually decrease the flow of imports into the country but demand for Chinese goods has only grown stronger and the increased price of oil has not helped either.
In Europe the news had a more bullish tone. The flash estimate of EZ GDP came in at 0.40%. It’s not quite the 0.60% that had been forecast but it is the first positive reading in the last five quarters and means the Euro Zone as a whole is out of recession. The news was enough to increase risk acceptance and keep the NZD buoyant.
• 16 November 09: NZ PPI
• 16 November 09: US Retail sales
• 16 November 09: US Empire manufacturing
• 17 November 09: AU RBA Minutes
• 17 November 09: EZ Trade balance
By Sam Spink - McCarthy, Corporate Dealer
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