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Westpac Global Markets Strategy Group: Morning FX Thoughts - NZ Edition

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Fuseworks Media
Fuseworks Media
Westpac Global Markets Strategy Group: Morning FX Thoughts - NZ Edition

US equities are currently up 0.3% after falling into the red around the weak NY Fed manufacturing survey, reports of corporate activity later offering support. The market is closely watching the S&P500's pivotal 1130 level. The CRB commodities index, too, is at level which has been tough to break. It slipped 0.4%, oil falling 1.3% on Canada-US pipeline restoration, copper unchanged. Worth noting is the turn lower in the Baltic shipping cost indices. NZ milk powder rose 1.4% at Fonterra's fortnightly global auction. US 10yr treasury yields rose 3bp, partly undoing the rumour-fuelled rally yesterday. The Fed bought $3.9b of treasuries of approximately 5yrs maturity.

The US dollar index stabilised around 81.50. EUR also consolidated between 1.2950 and 1.3040, preserving the large gains of the previous two days. GBP outperformed the majors, rising to 1.5652, a one-month high. After yesterday's BOJ intervention, USD/JPY finally came to a rest at 85.78 during late Europe, forming a bullish key day reversal pattern. Expectations the Fed may continue the intervention as an agent proved unfounded. AUD slipped further after Sydney closed, to 0.9343, but then bounced with US equities to 0.9240 which contained thereafter. NZD ranged between 0.7300 and 0.7360 during the offshore sessions. AUD/NZD largely consolidated between 1.2780 and 1.2830, a thrust to 1.2840, a four-month high, occurring an hour ago.

AUD/USD and NZD/USD outlook next 24 hours: AUD should be contained by 0.9320 and 0.9460 today. NZD is unlikely to breach the major 0.7395 level today, major support around 0.7260. That's assuming no surprises from the RBNZ meeting this morning, a one or two-meeting pause and balanced statement expected.

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