The Opening Bell: Where currencies start on Friday, August 4, 2017

By Dan Bell

The NZDUSD opens at 0.7447 (mid-rate) this morning.

The NZD is modestly higher overnight against the USD having traded a 138 point or 1.8% range this week. The Kiwi has settled in the middle of the week’s range having lost the 0.7500 handle.

Headlining the data releases overnight was the Bank of England which kept interest rates at a record low once again and trimmed its forecasts for growth in 2017 and 2018 as the impact of Brexit weighed on households’ spending power.

“The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. At its meeting ending on 2 August 2017, the MPC voted by a majority of 6-2 to maintain Bank Rate at 0.25%.”

UK Services Sector PMI Business Activity Index picked up to 53.8 in July, from 53.4 in June, to remain above the 50.0 no-change value for the twelfth month running. Optimism regarding the business outlook remains subdued, however Employment numbers rose at the fastest pace since January 2016.

In the week ending July 29, the advance figure for seasonally adjusted U.S. Initial Claims was 240,000, a decrease of 5,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 244,000 to 245,000. The 4-week moving average was 241,750

The seasonally adjusted IHS Markit U.S. Services Business Activity Index registered 54.7 in July, up from 54.2 in June. July survey data signalled a solid expansion in business activity among US service providers. New orders received by firms increased at the fastest pace for two years, which in turn contributed to a stronger rise in backlogs of work.

Orders at U.S. factories increased in June as demand surged for aircraft. Factory Orders increased 3% the gains largely thanks to a massive 131% jump in orders for civilian aircraft, a category that can be volatile on a monthly basis. Excluding the transportation sector that includes aircraft, factory orders slipped 0.2% in June.

Overnight data releases tonight include: US Trade Balance, US Unemployment rate, US Non-farm Employment Change, Canadian Unemployment rate, Trade balance and Employment change.

Global equity markets are mixed: Dow +0.04%, S&P 500 -0.22%, FTSE +0.85%, DAX -0.22%, CAC +0.46%, Nikkei -0.25%, Shanghai -0.37%.

Gold prices given back yesterday’s small gain, down 0.2% trading at $1,269 an ounce .WTI Crude Oil prices are up 1%, trading at $49.42 a barrel.

Current indicative rates:

NZDUSD       0.7447       0.2%
NZDEUR       0.6264       0.0%
NZDGBP       0.5664       0.8%
NZDJPY         81.85       -0.5%
NZDAUD       0.9359       0.3%
NZDCAD       0.9356       0.1%
GBPNZD       1.7658      -0.8%

Upcoming Data releases (NZST):

  • 1:30pm – AUD – RBA Monetary Policy Statement
  • 1:30pm – AUD – Retail Sales m/m

 

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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here »

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