USD strength has dominated currency markets overnight, rising against all major currencies. Equity markets are consolidating yesterday’s gains. The Dow has pushed up 0.2% to new highs, while the S&P 500 is broadly flat. Global yields have inched higher, while oil prices rose.
After testing the waters below 100, the DXY index has lifted 0.6% to around 100.60. Generally better than expected US economic data, led by the strongest services PMI reading (55.1) since late-2015, spurred the USD on.
USD/JPY has backed off its highs shy of 115.00 overnight to be currently around 114.60, still around 1.2% higher than 24 hours ago. The JPY not helped by a further push higher in risk appetite overnight. Our global risk appetite index nudged higher again to 77.6%.
Better than expected UK GDP figures, German consumer confidence matching a 16-year high, or a decent 2% rise in oil prices were not enough for the likes of GBP, EUR or CAD to combat USD strength. EUR/USD fell to around 1.0660, before paring loses. The pair currently trade around 1.0680. GBP/USD sits close to 1.2580, down 0.4% from around this time yesterday, while USD/CAD is up smalls around 1.3110.
The NZD found strength following yesterday’s higher than expected CPI inflation data (after a short drop just before data release on a rogue Bloomberg data print). From around 0.7270 leading into the CPI, NZD/USD briefly poked its nose above 0.7310 post-data before drifting lower. Overnight, USD strength took over with NZD/USD now close to yesterday morning’s level around 0.7240.
Yesterday’s highs just over 0.7300 should cap the NZD today, with overnight lows close to 0.7220 notable on the downside. More broadly, our short term model still favours higher with it now pushing above the 0.7400 level.
NZD/AUD held on to yesterday’s gains, at around 0.9600, helping keep the NZ TWI elevated at around 79.40.
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