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10 Second Summary
The currency and equity markets part their ways in last night’s offshore market. While Wall Street closed just in the red, the Pacific pair dominated over the USD. Month-end closures should ensure a special place for the AUD and NZD today, however do not expect any “warp speed” in the FX markets as investors await tonight’s US GDP data before making any further moves.
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Australian Dollar
The rumour of large AUD5bn purchase in the London markets overnight saw the Aussie outperform most currencies. The settling of the month-end flows too had a small contribution in the AUD’s stratospheric rise. While the Asian session is likely to pick up from where the US session ended, the 90USc level will remain a formidable barrier in the Aussie’s tracks.
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United States Dollar
Mirroring the overall negative sentiment the equity markets fell sharply at the start of the US session much to the joy of the Dollar. The stock markets however have since recovered and the USD closed mildly softer across the board. However with the 11k drop in jobless claims and the continuing positive earnings reports, the Greenback weakness is here to stay for the next few days.
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Euro
The Euro races above $1.31 as supportive EU data prompted investors to have a second look at the single currency. The economic revival in Europe seems to have erased all traces of the debt crisis for now. However these Euro jubilations could be short lived if tonight’s EU data highlights the slow-down in the global economy.
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Japanese Yen
The Yen rose against the weakened USD and NZD, however it could not match its pace against the brisker AUD. Expect the Yen /AUD & NZD cross to maintain narrow trading ranges today as investors cross off their excess exposure for the month end.
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New Zealand Dollar
A Black Thursday for the Kiwi, saw its hard earned gains wiped off in an instant after the RBNZ failed to excite Kiwi buyers with longer term expectations for OCR hikes. However thanks to the surprisingly upbeat EU company profit reports, the Kiwi managed to find support at the low 72USc levels. With USD weakness in sight expect the month end flows to give the Kiwi a tug towards the 0.7230USc this morning. Importers should take cover at these rates.
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