ANZ Morning Focus: FXWW

From the FXWW Chatroom: O/night NZDUSD 7202/7242 NZDAUD 9380/9415
Today NZDUSD 7180/7240 NZDAUD 9360/9420
· NZD drifted lower in a very narrow range on Friday – obviously those 7280 expiries were not big enough
· NZD now opens hear its lows and around support at 72cents. Expect profit taking fdrom shorts from here to 7150
· But the offshore market remains long – so any bounce is likely to attract sellers (from 7300-7350)
· NZDAUD sideways, lower on the London open but bouncing in to the close
· US treasuries received some attention on Friday with a number of stories discussing the impact of 3%
· US 10 year got to 2.96 where they closed (from 2.91, +5bp)
· Equities reacted, lower across the board with S&P -0.85% on the day, making their performance flat on the week
· Rocket Man said he’s stop playing with rockets (NK announced a halt to ICBM tests)
· Mnuchin – considering a trip to China to discuss trade. Taken as a positive and further unwound trade tensions
· EU cons conf rose to 0.4% in April vs 0.1 prev.
· Draghi acknowledged slowing growth momentum and said ‘patience, persistence and prudence’ is still needed
· Adrian Orr on the wires over the weekend suggesting the NZ Banks have a different culture than the Aus banks
· He also seemed keen on a capital gains tax and thought that current settings seemed appropriate
· https://www.stuff.co.nz/business/103266997/new-reserve-bank-boss-being-a-ginger-i-tend-to-run-towards-the-fire
· https://www.tvnz.co.nz/shows/q-and-a/episodes/s2018-e6
NZD is playing ball, weakening after a build-up of offshore longs and providing us a much needed dip. We are now roughly testing Feb/Mar support and expect shorts to be trimmed between here and 7150 (basically Feb/Mar lows). We would also expect local exporters to take advantage of this respite to top up hedging. From here we watch 7154 as the 21 Mar low. Through here we open up a much deeper correction and prefer holding a core short, and recycling any trimmed short on a rally back to 7280-7300.

This week, as with last, we will focus on another CPI print, this time across the Tasman. Tuesday sees the Aus CPI number released and we expect 0.5% qoq in line with market expectations and a 1.9% annualised number. This would be in stark contrast to NZ’s experience and should see further NZDAUD pressure. Also in Aus this week we get RBA’s Kent speaking and consumer confidence. Locally there is little to sink our teeth in to but we’ll watch Migration data, also on Tuesday. US and UK GDP round out the week and we get the ECB and US Durables on Thursday night.
It is a NZ and Aus holiday on Wednesday: ANZAC day.

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