There’s been plenty of economic news over the past 24 hours but none of it really added to the body of knowledge.
The market appears to be in a holding pattern ahead of Friday night’s US employment report. Some month-end portfolio rebalancing probably had as much impact on the market as anything.
There’s been a mild risk-off tone, with key US and European indices down half a percent or so and the VIX index up almost 5% to around 14.
Overall, August will go down as one of the least volatile months for the market in a while, with modest movements in currencies, equity markets and bond markets.
Despite the mild risk-off tone, the NZD heads the leaderboard with a gain of 0.5% to 0.7250, not far off its highs for the day. That said, it hasn’t been a convincing gain, as it has jobbed around a bit in a 50pip range and only a few hours ago was flat.
The ANZ survey showing robust activity indicators and a mild fall in inflation expectations didn’t rock the boat.
The AUD has been relatively flat around 0.7510 and this saw NZD/AUD up to as high as 0.9660, its highest level in six weeks.
The 0.96 area has proven to be an area of resistance over the past couple of months. On one occasion it broke up to as high as 0.9697, but that didn’t last long.
While we see parity as a matter of when, not if, we’re not convinced now is the time for a run up to that level. Our short term models suggest that AUD0.92-0.94 is a fairer level at present.
For the other majors, there’s not much else to report. GBP is up to 1.3130, but it’s been a choppy session, while EUR is fairly flat at 1.1150. USD/JPY has drifted up to the 103.40 mark, having now retraced all of the previous falls this month and returning to late-July levels.
Overall, the USD is flat on various indices. China PMI indices this afternoon and the US ISM data will be of some interest to the market, but really this is just the entrée to Friday’s main course of US employment.
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