The Opening Bell: Where currencies start on Friday, May 12, 2017

By Dan Bell

The NZDUSD opens at 0.6852 (mid-rate) this morning.

The Kiwi was the worst performing currency of the majors in the last 24 hours. 

The Kiwi fell 100 points after the RBNZ rate announcement yesterday at 9am. The RBNZ left rates at 1.75% as expected but the key point was monetary policy will remain accommodative for considerable period.

In the week ending May 6, the advance figure for seasonally adjusted U.S. initial claims was 236,000, a decrease of 2,000 from the previous week’s unrevised level of 238,000.

The bigger-than-forecast rebound in April wholesale prices indicates inflation pressures continue to build in the U.S. economy and that March’s decline was short-lived, Labour Department data showed overnight. U.S. Producer-price index increased 0.5%, forecast was 0.2% rise, following a 0.1% decline the prior month.

The U.K. Index of Production for Q1 2017 was estimated to have increased by 0.1%. Increases of 0.3% in manufacturing and 1.8% in mining and quarrying were offset by a fall of 4.3% in energy supply. In March 2017, total production decreased by 0.5% compared with February 2017.

Between Q4 2016 and Q1 2017, the total trade deficit for the UK (goods and services) widened by £5.7 billion to £10.5 billion; this followed a sharp narrowing in Q4 2016. The UK’s total trade deficit (goods and services) widened by £2.3 billion between February and March 2017 to £4.9 billion, contributing nearly half of the quarterly deficit.

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 10 May 2017, the Committee voted by a majority of 7-1 to maintain Bank Rate at 0.25%. The Committee voted unanimously to maintain the stock of sterling non-financial investment-grade corporate bond purchases, at £10 billion, and the UK government bond purchases at £435 billion.

The Bank of England said it may need to raise interest rates faster than the market suggests, assuming that Brexit goes well.

Global equity markets are mixed – Dow -0.17%, S&P 500 -0.28%, FTSE +0.02%, DAX -0.36%, CAC -0.32%, Nikkei +0.31%, Shanghai +0.29%.

Gold prices are up $7 or 0.6% trading at $1,225 an ounce .WTI Crude Oil is up 1.2% currently trading at $47.81 a barrel.

Current indicative rates:

NZDUSD       0.6852     -1.1%
NZDEUR       0.6307     -1.1%
NZDGBP       0.5314     -0.7%
NZDJPY        78.00        -1.6%
NZDAUD       0.9291     -1.3%
NZDCAD       0.9382     -1.0%
GBPNZD      1.8809      -0.4%


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

Daily exchange rates

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