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NZD Reverses Gains on Positive USD Data

Published April 12, 2019

NZD opens down after a relatively quiet night for the majors. We open this morning 30 points off the overnight highs as the market rallied the EUR and USD after FED and ECB pronouncements and data releases. We’d expect the NZD to range trade today as the week draws to a close. In the absence of any major global announcements Next Wednesday’s quarter on quarter CPI numbers should give the NZD some direction. As for the associated cross rates, we open on Friday, pretty much where we did on Monday notwithstanding some mid-week volatility for both the USD and EUR, down slightly on the AUD and GBP crosses as those currencies ground ever so slowly higher against the USD.

EUR strengthens a little overnight as ECB says Euro area is slowing down, but NOT in recession, further to the noted in yesterday’s commentary, the central banker has reassured the market they have the mechanisms in place to support the region, but that the region’s economic indicators are likely to get worse in the near term. However, stronger European manufacturing data offset slightly weaker US inflation numbers resulting in a calm night for traders.

GBP had a moribund reaction to the news of a further Brexit extension as this was widely anticipated, however uncertainty will persist. The new extension is for 6 months.

USD has softened marginally over night after FED minutes released and were deemed a little more hawkish than expected , with some market traders caught out with some central bankers expressing an interest in hiking rates should the US economy improve , however the overtones had held that the US economy was healthy and FED policy is “in the right place” ..for now. As if to support that, overnight US jobless claims fell to their lowest rate in 49 years, however, headline the Producer Price Index (PPI) ticked up slightly but core PPI slipped this divergence is concerning as it implies the demand is cooling.