Commodity-linked currencies have been the worst performers over the past 24-hours, led by the NOK. The USD has strengthened.
In the backdrop of the post-payrolls lull in data delivery, the global oil price took centre stage overnight.
Following on from OPEC’s decision not to curb production, the WTI oil price has plunged a further 5%. It now trades, close to its lows for the year, at levels last seen in early-2009. The energy sector of the S&P500 declined 4.0%, dragging the equity index to a 0.8% loss for the night.
Unsurprisingly, oil-linked currencies were amongst the worst performers. The NOK has declined 1.6% over the past 24-hours and the CAD 1.1%.
The NZD/USD and AUD/USD have also not fared well. Both were on a declining trend yesterday, with downward momentum building overnight.
The early-Saturday bounce in the NZD/USD has proved short-lived. The currency has fallen back below its pre-payrolls level, in the backdrop of weak commodity markets.
The decline has also likely been assisted by the modest decline in NZ short-end yields yesterday, ahead of Thursday’s RBNZ meeting. The NZD/USD trades at 0.6640. Support is now eyed approaching the 0.6600 level.
The NZD has also weakened on the crosses. Most of its losses in the NZD/AUD occurred during the day, with some consolidation above the 0.9140 level overnight. The cross remains within its current fundamental fair value range that we calculate to sit between 0.8950 and 0.9240.
The NZD/EUR has also slipped over the past 24-hours, from 0.6200 to trade at 0.6120 currently. The EUR weakened during the evening following a disappointing German industrial production release.
The unexpectedly small rise in production was another indication that German growth has peaked. Still, the EUR/USD recovered in the early hours of this morning, leading to a weaker NZD/EUR.
Tonight’s focus for the EUR will be the preliminary release of Q3 Eurozone GDP. The GBP may take its cue from the release of UK industrial production data.
Domestically we will be looking out for Q3 manufacturing activity data today. Across the Tasman, the NAB business survey will be in focus. The AUD (and by association the NZD) also has potential to be influenced by the release of China trade balance data this afternoon.
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Kymberly Martin is on the BNZ Research team. All its research is available here.