NZD/USD traded the entirety of a 0.36 cent range over the past 24 hours. That falls within the bounds of what we in the industry call “sharply unchanged”.
Other major currencies are very near to Friday’s closing levels. On balance, the USD is slightly stronger.
China’s economic reports released yesterday were mixed. While Q3 GDP marginally beat expectations (but still below the official 7.0% target), the softness in industrial production and fixed asset investment tempered any sharp uplift in China-related risk appetite. If anything, the soft numbers are part of the reason oil prices are down by 3%, along with higher-than-expected Saudi production.
Of interest to us, USD/CNH continues to drift higher, and has accelerated in the past few hours. It is now at its weakest level since late September. If this drift higher persists, it could have a negative influence on AUD and NZD in a market rather bereft of directional cues.
Generally speaking, global investors have paid more attention to equity markets, as the US corporate earnings season rolls on. Morgan Stanley lost nearly 7%, helping the S&P 500 fall 0.3%.
Elsewhere, the market largely ignored the very strong print in the US’ NAHB housing market index. At 64, the index sits at its highest level since 2006. This is another indication that strength in sectors sheltered from factors like global demand and the USD is offsetting the widely-publicised slowdown in manufacturing. Whether this will be enough to see the Fed raise rates before year-end remains an open question.
The RBA minutes today should not trouble the scorers. BoE Governor Carney’s appearance in front of lawmakers today will be watched for clues about his policy tightening intentions. The Fed’s Dudley and Powell speak on a panel tonight, and we’ll be looking to see whether their cautious message (relative to Yellen, Fischer) remains consistent. As for tonight’s dairy auction, we’re looking for some consolidation or even possible retracement of the recent eye-watering price gains.
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Raiko Shareef is on the BNZ Research team. All its research is available here.