Analysis and Recommendation: The NZD/USD dipped 17 points as traders continued to shun commodity and commodity currencies sending the kiwi to trade at
The NZD/USD dipped 17 points as traders continued to shun commodity and commodity currencies sending the kiwi to trade at 0.6668. Janet Yellen’s testimony helped send the US dollar rebounding. NZ business confidence printing a bit higher than expected helping to limit declines. Fed chair Janet Yellen affirmed her expectation for “gradual increases” in the central bank’s key target interest rate but also noted downside risks including tighter US financial conditions, persistently low inflation, a higher US dollar, global markets turmoil and risks for Chinese growth and the Chinese yuan. Her tone surprised some in the market, and saw the greenback weaken against the yen, and spillover into currencies such as the kiwi.
“Yellen was a bit more dovish that the market expected,” said Michael Johnston, senior trader at HiFX. “We saw US dollar liquidation and buying of the yen which spilled over to the kiwi.” The moves were exacerbated by a bank holiday in Japan and Chinese New year, which reduced liquidity in the market, he said.
Traders will be anticipating the dairy auction next week, which “could see the luster of the kiwi come back off” and the weak greenback is a factor that will nudge it higher again.
The kiwi didn’t move much after a survey showed New Zealand manufacturing activity rose to a 15-month high in January, with an uptick in production and employment pointing to further improvements ahead, though not across all industries.
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Today’s economic releases:
Cur. | Event | Actual | Forecast | Previous | |||
Japan – National Founding Day | |||||||
China – Lunar New Year | |||||||
NZD | Business NZ PMI (Jan) | 57.9 | 56.7 | ||||
GBP | RICS House Price Balance (Jan) | 49% | 52% | 49% | |||
EUR | Eurogroup Meetings | ||||||
USD | Initial Jobless Claims | 281K | 285K | ||||
CAD | New Housing Price Index (MoM) (Dec) | 0.2% | 0.2% | ||||
USD | Fed Chair Yellen Testifies |
Upcoming Economic Events that you should be monitoring:
Friday, February 12, 2016
Holiday China – Lunar New Year
Cur. | Event | Actual | Forecast | Previous | |||
AUD | RBA Governor Stevens Speaks | ||||||
AUD | Home Loans (MoM) (Dec) | 3.0% | 1.8% | ||||
EUR | German CPI (MoM) (Jan) | -0.8% | -0.8% | ||||
EUR | German GDP (QoQ) (Q4) | 0.3% | 0.3% | ||||
EUR | German GDP (YoY) (Q4) | 2.3% | 1.8% | ||||
EUR | EU Finance Ministers Meeting | ||||||
EUR | GDP (YoY) (Q4) | 1.5% | 1.6% | ||||
EUR | GDP (QoQ) (Q4) | 0.3% | 0.3% | ||||
EUR | Industrial Production (MoM) (Dec) | 0.3% | -0.7% | ||||
USD | Core Retail Sales (MoM) (Jan) | 0.1% | -0.1% | ||||
USD | Export Price Index (MoM) (Jan) | -0.9% | -1.1% | ||||
USD | Import Price Index (MoM) (Jan) | -1.4% | -1.2% | ||||
USD | Retail Sales (MoM) (Jan) | 0.1% | -0.1% | ||||
USD | FOMC Member Kaplan Speaks | ||||||
USD | Business Inventories (MoM) (Dec) | 0.1% | -0.2% | ||||
USD | FOMC Member Dudley Speaks | ||||||
USD | Michigan Consumer Expectations | 82.0 | 82.7 |
Government Bond Auctions
Date Time and Country
Feb 11 N/A Italy Euro 4-5bn 30-yr syndicated bond auction
Feb 11 11:03 Sweden Holds I/L bond auction
Feb 11 11:10 Italy Announces details of bond auction
Feb 11 11:30 UK 3.5% 2045 Gilt auction
Feb 11 19:00 US Holds 30-year bond auction
Feb 11 n/a US Details of 30-yr TIPS auction on Feb 18
Feb 12 11:10 France Details of bond auction on 18 Feb