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Thin markets producing record extremes

Written by Sam Coxhead on December 31st, 2010.      0 comments

8:23 AM (NZT) The incredibly thin markets continue into the last trading day of the year. The NZD saw a record high against the GBP of .5007. The AUD yet again set a new high against the USD at 1.0200 and the Swiss Franc was pushed to new all time highs on multiple cross rates as panic sold position covering provided the boost.

The Pound Sterling saw selling pressure from the month end buying of the EUR/GBP and in the thin markets this put it on the back foot against all currencies.

Strong economic data continues to flow in the US, with a manufacturing index overnight reaching levels not seen in 12years and housing numbers much better than expected.

    Last 24 hours trade
  Current level Low  High
NZD/USD 0.7701 0.7643 0.7726
AUD/USD 1.0150 1.0114 1.0200
NZD/AUD 0.7581 0.7508 0.7605
AUD/NZD 1.3190 1.3149 1.3319
NZD/GBP 0.4988 0.493 0.5007
NZD/EUR 0.5788 0.5819 0.5775
NZD/JPY 62.65 62.39 63.03
NZD/CAD 0.7693 0.7643 0.7723 
 

Australasian currencies on fire!

Written by Sam Coxhead on December 30th, 2010.      0 comments

11:33 AM (NZT) The Australian and New Zealand dollar's continue the weeks rampant form since Christmas. In the last 24hrs the NZD has been the standout reaching a high of .7691. The AUD has had a modern era high of 1.0184 and is poised to move through that level as rumours of a large M&A transaction boosts demand for the AUD.

Earlier on in the day the Kiwi dollar raced higher against the beleaguered Pound Sterling to reach a post float high of .4956 and establish it self again above the .5800 against the EURO.

This week has been an excellent example of the accentuted moves in very illiquid markets. One has to wonder if post financial year end for many institutions, will we see a reversal of these moves that have been made on no strong economic data?
    Last 24 hours trade
  Current level Low  High
NZD/USD 0.7673 0.7535 0.7691
AUD/USD 1.0178 1.0084 1.0184
NZD/AUD 0.7540 0.7461 0.7543
AUD/NZD 1.3262 1.3257 1.3403
NZD/GBP 0.4952 0.4841 0.4956
NZD/EUR 0.5805 0.5759 0.5822
NZD/JPY 62.65 62.08 62.76
NZD/CAD 0.7675 0.7539 0.7696 
 

NZ GDP dips into negative territory

Written by Sam Coxhead on December 23rd, 2010.      0 comments

12:01 PM (NZT) NZ GDP figures released disappointed at -.2% versus an expectation of +.1%. This adds weight to the RBNZ’s view that the recovery had slowed somewhat. Whilst we are not the only economy to delve back into negative growth, this will add to the heavy nature on the NZD as we head into the end of the year. Along with the disruption in Canterbury by the earthquake, manufacturing, mining and construction were the weakest sectors.
 
          Last 24 hours trade
  Current level Pre-NZ GDP Chge NZ GDP   Low High
NZD/USD 0.7411 0.7415 -0.1%   0.7403 0.7452
AUD/USD 0.9995 0.9997 0.0%   0.9952 1.0012
NZD/AUD 0.7417 0.7425 -0.1%   0.7407 0.7458
AUD/NZD 1.3482 1.3468 0.1%   1.3408 1.3500
NZD/GBP 0.4815 0.4822 -0.1%   0.4783 0.4835
NZD/EUR 0.5657 0.5664 -0.1%   0.5637 0.5681
NZD/JPY 61.95 61.98 0.0%   61.90 62.35
NZD/CAD 0.7510 0.7520 -0.1%   0.7503 0.7573

The NZD has been lower since the release , but has ground its way back. I would not be surprised to see a little more pressure come back on it in the London time zone, as all evidence points to very low levels of liquidity in the Asian time zone at present.
 

 

NZ Current Account hits surplus

Written by Sam Coxhead on December 22nd, 2010.      0 comments

11:10 AM (NZT) New Zealand Current Account for the September quarter showed a 35million dollar surplus, mainly due to Christchurch earthquake re-insurance flows to the tune if 1.7billion dollars. Also adding to the dramatic change is circumstance was a 551million dollar smaller investment income deficit. There was almost no movement on the currency market after this release.

All eye's now look towards tommorrow's NZ GDP figure due at 10:45 AM NZT
 

RBA Meeting minutes Dec 2010

Written by Sam Coxhead on December 21st, 2010.      0 comments

12:01 PM (AEST) The RBA minutes of the Monetary Policy meeting two weeks ago have been released and again are a very good overall assessment of both Australian and International markets and well worth a read if you have time. The link is copied below. Exchange rates are pretty much unchanged.
 
In short the RBA see strong signs continuing in major commodity markets of India and China, modest growth in the US and acknowledge the seemingly ever present threat of further disturbances in the European debt markets. Domestically the manufacturing and consumer sectors remain cautious, but overall business confidence is high and the labour market is strong. On balance they see they cash rate at 4.75% as appropriate,and mildly restrictive.
 
RBA Meeting Minutes Dec 2010
 
          Last 24 hours trade
  Current level Pre-RBA Mins Chge RBA Mins   Low High
NZD/USD 0.7411 0.7408 0.0%   0.7342 0.7438
AUD/USD 0.9928 0.9930 0.0%   0.9858 0.9951
NZD/AUD 0.7465 0.7461 0.1%   0.7434 0.7479
AUD/NZD 1.3395 1.3403 -0.1%   1.337 1.3451
NZD/GBP 0.4777 0.4775 0.0%   0.4741 0.4789
NZD/EUR 0.5648 0.5645 0.1%   0.5582 0.5664
NZD/JPY 62.08 62.05 0.0%   61.76 62.29
NZD/CAD 0.7545 0.7542 0.0%   0.7434 0.7570
 

Direct FX Weekly Update - Dec 20th 2010

Written by Sam Coxhead on December 20th, 2010.      0 comments

Currency Commentaries:

Click to access our currency pair reports:  
NZD/USD                                      AUD/USD                                    GBP/USD
NZD/AUD (AUD/NZD)                    AUD/GBP (GBPAUD)                    GBP/EUR (EUR/GBP)
NZD/GBP (GBP/NZD)                    AUD/EUR (EUR/AUD)                   GBP/RAND
NZD/EUR (EUR/NZD)
NZD/CAD                                                            
NZD/RAND
NZD/YEN
  

Major Announcements last week:

  • NZ Retail Sales -2.5% vs -.8% expected
  • UK CPI 3.3% vs 3.1% expected
  • US Retail Sales +1.2% vs .7% expected
  • UK Unemployment 7.9% vs 7.7% expected
  • UK Retail Sales +.3% vs +.5% expected
  • German Business confidence at record high
  • Two US manufacturing surveys stronger than expected
  • Moody’s down grade Irish credit rating to Baa1 

Market Overview:

The thin nature of the markets continued as expected in the last week. The US dollar in general remained on the front foot, apart from the odd quick turnaround which highlighted the low levels of liquidity.
 
The US dollar was supported on a couple of fronts. The early part of the week saw the continued rise of US bond yields and this is generally USD supportive, as investors have to buy USD, to invest in the bonds at the higher yield. Even as yields gave up some of the gains in the Thursday and Fridays sessions, the USD remained in favour. The secondary driver was the continued Govt debt issues that plague Europe and the EURO. Friday saw a sharp drop in the EURO as credit agency Moody’s downgraded the rating of Irish debt a massive five notches from Aa2 to Baa1. The downgrade was no surprise, but it was the extent of the downgrade that caught the market on the hop. US data has continued to be positive with retail sales and manufacturing numbers beating market expectations. The coming week’s focus for the US will be housing and durable goods numbers due for release, which potentially could confirm more broad based economic growth.
 
The shambles over the peripheral Euro-zone  member state Govt debt continues. The magnitude of the Irish downgrade will no doubt place even more pressure on the likes of Portugal and Spain. The two tiered nature of Europe’s economy is highlighted by further positive economic news in Germany and France. German business confidence numbers reaching record high levels on release on Friday . This kind of contradiction highlights the problems the Euro-zone face, when having one central bank dealing with such varied parts of the Euro-zone economy. With little on the coming week’s economic calendar, focus will remain on the Debt issues and any development’s which transpire from that.
 
Economic data has turned back to the soft side of late in the UK. Inflation remains high and last week saw higher unemployment and lower retail sales numbers recorded. The Bank of England (BoE)seems to be doing its best to talk down the value of the GBP. They are doing this by reiterating they remain poised to introduce a second round of quantitative easing, should the situation in Europe bring about a collapse in the EURO.
 
The Australian dollar performed well over the last week, in the absence of any meaningful local data. Importantly for the AUD, the Chinese seem content to slow their economy by means of increasing the curbs on bank lending, as opposed to interest rate increases. This current stance has reduced any short term threats to the fortunes of the AUD, from that key export market. This coming week is again light on economic data, but the RBA Monetary Policy Meeting Minutes will be of focus on Tuesday. When we refer to “Monetary Policy Meeting Minutes”, as we often do when discussing the RBA, BoE, and the US Federal reserve, we are referring to the minutes of meetings held, when deciding their previous interest rate decisions. Whilst these minutes are released well after the decisions has been made public, the market takes them and dissects them, in the hope of finding clues to their future thinking, and therefore clues to the future direction of FX markets.
 
Negative sentiment towards the New Zealand dollar is being backed up by weaker than expected economic data. Retail sales numbers released last week were very weak in October as New Zealand’s economic growth remains patchy at best. Investors exited bought NZD position’s in large numbers last week, placing it under pressure against most currencies. GDP numbers due for release on Thursday will be the focus ahead of the Christmas break. 
 

NBNZ Business Confidence survey stalls..

Written by Sam Coxhead on December 16th, 2010.      0 comments

4:25 PM (NZT) The National Bank of New Zealand (NBNZ) Business Confidence Survey showed almost no change when compared to November, which is to say that key gauges are at respectable levels without looking too optimistic. The overall number was just off slightly at 29.5 when compared to 33.2 in November and the key gauge of “own expectations” was relatively unchanged at 34.5. Balancing out a more optimistic export sector is the residential construction sector which has slumped since November.
 
The New Zealand dollar was relatively unchanged by this benign survey.
    Last 24 hours trade
  Current level Low High
NZD/USD 0.7388 0.7382 0.7505
AUD/USD 0.9860 0.9836 0.9964
NZD/AUD 0.7487 0.7474 0.7535
AUD/NZD 1.3356 1.3271 1.3379
NZD/GBP 0.4751 0.4736 0.4783
NZD/EUR 0.5587 0.5570 0.5625
NZD/JPY 62.23 62.10 62.94
NZD/CAD 0.7417 0.74 0.7560



 

USD back on the front foot

Written by Sam Coxhead on December 16th, 2010.      0 comments

8:47 AM (NZT) The illiquid nature of the market continues in overnight trade. The USD has stepped onto the front foot buoyed by stronger economic data in the form of the NY State Manufacturing Index which recorded more activity than was expected. The continued rise in Govt. bond yields also leads the USD support. Adding to the USD strength was a poor Unemployment rate in the UK of 7.9% and again increased concerns about the European debt situation. The meeting of Eurozone Finance ministers over the next two days is adding to the pressure.
 
The NZD remains on the back foot more than most as the recent poor economic data, credit rating “negative watch”, worsening Govt. fiscal position, and lower projections from the RBNZ have seemingly spooked bought NZD accounts, and liquidations of these positions continue. A positive Fonterra online milk auction result overnight could do nothing to stem the tide in the offshore session.
 
    Last 24 hours trade
  Current level Low High
NZD/USD 0.7385 0.7382 0.7576
AUD/USD 0.9847 0.9842 1.0028
NZD/AUD 0.7497 0.7480 0.7550
AUD/NZD 1.3356 1.3245 1.3368
NZD/GBP 0.4750 0.4736 0.4783
NZD/EUR 0.5581 0.5570 0.5625
NZD/JPY 62.41 62.22 63.05
NZD/CAD 0.7416 0.7409 0.7584
 

No surprise from US Fed's FOMC statement

Written by Sam Coxhead on December 15th, 2010.      0 comments

8:20 AM (NZT) The US Feds Federal Open Market Committee (FOMC) gave no surprises at the release of the meeting statement this morning. They used identical language on the Quantitative Easing program as they used in November. They acknowledged that the US economy was improving, but said this improvement was insufficient to lower unemployment at this stage. The was debate on whether or not they would talk about the recent elevation in longer term interest rates in the US, but there was no comment on this. The USD was only slightly weakner post statement, but given this month’s volatility, there was nothing in it.
 
          Last 24 hours trade
  Current level Pre-FOMC Chge since FOMC   Low High
NZD/USD 0.7542 0.7543 0.0%   0.7487 0.7577
AUD/USD 1.0012 1.0010 0.0%   0.9938 1.0020
NZD/AUD 0.7535 0.7535 0.0%   0.7517 0.7596
AUD/NZD 1.3271 1.3271 0.0%   1.3165 1.3303
NZD/GBP 0.4773 0.4773 0.0%   0.4719 0.4781
NZD/EUR 0.5623 0.5619 0.1%   0.5587 0.5647
NZD/JPY 62.86 62.86 0.0%   62.46 63.10
NZD/CAD 0.7576 0.7573 0.0%   0.7535 0.7626 
 

NZ Retail Sales shocker!

Written by Sam Coxhead on December 14th, 2010.      0 comments

11:00 AM (NZT) This mornings release of NZ retail sales numbers saw the  number come out at -2.5% vs the expectation of -.8%. This horrid number saw the NZD smacked lower on all cross rates. This type of number backs up the RBNZ’s lowering of the economic activity forecasts for NZ. The post number low for the NZD/USD is .7487. It also looks like speculative accounts have been flushed out of bought NZD/sold AUD positions.
 
Please note that markets are particularly illiquid at the moment, which can be evidenced by the short squeeze overnight that saw the USD under pressure from the EUR especially. All this on very little economic data or major news. December markets are notorious for these conditions as many market participants keep activity to a minimum.
 
          Last 24 hours trade
  Current level Pre-Retail Sales Chge since Retail Sales   Low High
NZD/USD 0.7512 0.7547 -0.5%   0.7456 0.7577
AUD/USD 0.9968 0.9950 0.2%   0.9828 0.9984
NZD/AUD 0.7540 0.7586 -0.6%   0.7573 0.7604
AUD/NZD 1.3263 1.3182 0.6%   1.3151 1.3204
NZD/GBP 0.4737 0.4760 -0.5%   0.4719 0.4787
NZD/EUR 0.5608 0.5637 -0.5%   0.563 0.5682
NZD/JPY 62.63 62.97 -0.5%   62.63 63.31
NZD/CAD 0.7570 0.7610 -0.5%   0.7529 0.7628 
 

Direct FX Weekly Update - Dec 13 2010

Written by Sam Coxhead on December 13th, 2010.      0 comments

Currency Commentaries:

Click to access our currency pair reports:  
NZD/USD                                      AUD/USD                                    GBP/USD
NZD/AUD (AUD/NZD)                    AUD/GBP (GBPAUD)                    GBP/EUR (EUR/GBP)
NZD/GBP (GBP/NZD)                    AUD/EUR (EUR/AUD)                   GBP/RAND
NZD/EUR (EUR/NZD)
NZD/CAD                                                            
NZD/RAND
NZD/YEN
 

Major Announcements last week:

·         Obama extends the “Bush tax cuts”
·         US bond yields rise sharply, underpin USD demand
·         Aust. Employment numbers strong , unemployment rate 5.2%
·         RBNZ lowers NZ growth projections
·         Chinese inflation rises to 5.1%
·         Chinese bank reserve ratios increased to stem growth
·         European Govt debt remains under spotlight 
 

Market Overview:

The last week’s trade in the market was reasonably choppy in nature. December is notoriously illiquid, with the market lacking depth and this has been easily observed. On balance, mainly sideways movement has been seen in most currencies. Whilst focus remains on the European debt crisis, there was no major market moving news to hit the headlines. The debate remains based around the most efficient path forward to stem the contagion spreading from Greece and Ireland to other member states. It seems fairly obvious to all that a coordinated approach is needed, but as yet a definitive course of action has not been decided upon. The idea of initiating a Euro-Bond program, for all member states to replace individual member Govt debt, has been squashed. The ECB and German Govt saying that this is not an option. As the difference in yields between peripheral member states and the benchmark Germany remain wide, focus will remain on Europe.
 
The bi-product of the Federal Reserve’s Quantitative Easing (QE) program up until last week has been one of weakening the USD. This theme well and truly stopped last week as Obama’s extension of the Bush tax cuts gave the market a real growth outlook boost. This saw bond yields rise in an incredibly fast fashion. The global benchmark US 10 year yield rose by over 25% to sit around 3.30%. Rising yields will provide a base for USD strength. With the exception of the recent horrible employment numbers, the economic data in the US has been mainly positive of late, and looks likely to continue into 2011 as the stock market is at its highest level in over two years.
 
The Great British Pound had a strong week, outperforming across the board. Buoyed by better manufacturing numbers and a positive recruitment survey which pointed to stronger employee demand across all sectors, the chances of continued recovery remain well placed. Barclays Bank also released a paper that said they see the Pound Sterling as being the best performing major currency in 2011. The Bank of England monetary policy meeting was uneventful, but they remain poised to react to any developments in 2011.
 
In Australia, the RBA monetary policy meeting was reasonably uneventful, but the stellar employment numbers produced the big surprise with the unemployment rate dipping to 5.2%. This meant any dips in the AUD were shallow. Chinese officials raised the reserve ratios for the Chinese banks for the third time in a month. This is an attempt to slow the economy and in particular the property market. Inflation also remains a problem in China with inflation recorded at 5.2%, with food prices leading the way. With the Australian dollar so closely linked to development in China, any interest rate rise in China may temper demand for the AUD in the short term.
 
Running up to the RBNZ cash rate review the NZD saw some selling pressure come to the market as investors who had bought NZD repositioned themselves. This weakness continued after the RBNZ statement because of the more cautious wording with regards to the economic recovery. With growth below the RBNZ projections held at the previous statement in September, the market now has just half a chance of a 25pt hike in the cash rate by June 2011. With the prospect of low interest rates for longer, it is reasonable to expect that any rallies will be limited in the short term. Another interest rate rise in China will negatively impact all the commodity/growth currencies, but given New Zealand is a food exporter, the medium term impacts are less certain.
 
In Canada the Bank of Canada monetary policy statement was also more cautious than the market expected, with interest rates expected to remain on hold for longer than expected a few months ago. Export numbers remain buoyant and property looks to have stabilised. If the positive story in the US continues to gain momentum, so will the prospects for Canada, being its closest and largest trading partner.
 
The strength of the Rand remains of concern in South Africa. Its remains the key factor for the South African Reserve Bank, in terms of their assessment of a further cut in interest rates. The theory being that a cut in interest rates will make the Rand less attractive to foreign investors as the yield drops, and therefore the Rand will decline in value. With retail sales and housing numbers seemingly picking up, the balance comes from the manufacturing sector which remains under pressure.
Topics: Weekly FX December 2010
 

Strong Employment numbers see skippy jump

Written by Sam Coxhead on December 9th, 2010.      0 comments

11:56 AM(AEST) Australian employment  saw a strong rise in the number of new jobs of 54.6k to lower it's unemployment rate of 5.2% , this caused a nice 50pt jump in the AUD and managed to drag the NZD with it, although the NZD has given over half its gains. This is a solid number and will be heartening for Australians after a string of weaker data of late. We are certainly at levels of great buying of NZD, for those that have AUD to sell.

          Last 24 hours trade
  Current level Pre-AUST EMPL Chge since AUST EMPL   Low High
NZD/USD 0.7489 0.7476 0.2%   0.7430 0.7666
AUD/USD 0.9845 0.9794 0.5%   0.9748 0.9859
NZD/AUD 0.7608 0.7634 -0.3%   0.7595 0.7689
AUD/NZD 1.3144 1.3099 0.3%   1.3005 1.3166
NZD/GBP 0.4735 0.4730 0.1%   0.4706 0.4795
NZD/EUR 0.5645 0.5638 0.1%   0.5609 0.5708
NZD/JPY 62.85 62.81 0.1%   62.47 63.32
NZD/CAD 0.7565 0.7559 0.1%   0.7521 0.7654
 

RBNZ stance sees NZD pummeled

Written by Sam Coxhead on December 9th, 2010.      0 comments

9:20 AM (NZT) The RBNZ stance trashes outlook for NZD. The RBNZ this morning left the cash rate unchanged at 3%. The statement is copied below and does seem to be  less positive than in September with regards to the domestic economy. Due to the high level of the NZD and weaker economic outlook, the interest rate track has been moderated. The NZD has seen further downside again since the statement, and will be interesting to see where the market takes things from here. Bollard now commenting that the softness of the local economy has surprised them. The agricultural exports have certainly saved the economy from wilting.
          Last 24 hours trade
  Current level Pre-RBNZ Chge since RBNZ   Low High
NZD/USD 0.7455 0.7494 -0.5%   0.745 0.7580
AUD/USD 0.9793 0.9797 0.0%   0.9753 0.9859
NZD/AUD 0.7615 0.7650 -0.5%   0.7615 0.7700
AUD/NZD 1.3132 1.3071 0.5%   1.2972 1.3132
NZD/GBP 0.4720 0.4744 -0.5%   0.4718 0.4804
NZD/EUR 0.5625 0.5653 -0.5%   0.5623 0.5708
NZD/JPY 62.63 62.99 -0.6%   62.63 63.32
NZD/CAD 0.7532 0.7577 -0.6%   0.7532 0.7667
Date 9 December 2010
The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 3.0 percent.
Reserve Bank Governor Alan Bollard said: “Interest rates are now projected to rise to a more limited extent over the next two years than signalled in the September Statement.
“The pace of economic growth appears to have moderated. Corporate investment intentions are now below average. Household spending also remains weak, with household credit still flat and housing market activity slowing further. House prices may decline a little further in the near term. This continued household and business caution suggests current low interest rates are having a less stimulatory effect than in the past.
“On the positive side, activity in New Zealand’s trading partners continues to expand. Growth in the Asia-Pacific region remains strong, and growth in the US and UK has turned out a little stronger than was projected. Consistent with this, export commodity prices, which were already very high, continue to increase. While this is encouraging, downside risks to global growth and export prices persist.
“Repairs to earthquake damage in Canterbury are expected to add to GDP growth over the projection period. The earthquake appears to have caused about $5 billion of damage to infrastructure, and residential and commercial property.
“While the near-term outlook for GDP growth has softened, beyond this, higher export volumes and earthquake repairs are expected to push GDP growth above that projected in the September Statement. As growth recovers, current spare capacity will gradually be used up, causing underlying inflation to pick up. More immediately, the recent increase in the rate of GST will cause headline CPI inflation to spike higher temporarily, although there is little evidence of this spike affecting price and wage setting behaviour.
“While interest rates are likely to increase modestly over the next two years, for now it seems prudent to keep the OCR low until the recovery becomes more robust and underlying inflationary pressures show more obvious signs of increasing.
“The New Zealand dollar has appreciated significantly since the September Statement. Sustained strength in the currency is inhibiting the rebalancing of economic activity towards the tradable sector. Accelerated elimination of New Zealand’s fiscal deficit could help improve national savings, thereby easing current pressure on interest rates and the New Zealand dollar, and reducing New Zealand’s dependence on international borrowing.”
 

Update ahead of the RBNZ

Written by Sam Coxhead on December 9th, 2010.      0 comments

 8:10 AM (NZT) Interesting moves overnight as bond yields in the US (leading others around the globe) head higher and this gives support to the USD.  Apart from being led by the Obama’s tax package in the US, its looks like a good old fashion flush out of invested positions being forced to sell out of the money. The high in the 10yr US yield has been 3.33% up from around 3.10% yesterday, and up from around 2.50% when the Fed announced its second round of QE which was intended to keep longer end rates low.
 
Ahead of the RBNZ’s statement at 9am today , the NZD has seen some decent repositioning of its own. It has been trampled across the board, selling off between .6 and 1.3% against the major trading partners, with the GBP seeing the largest appreciation over the NZD.
 
    Last 24 hours trade
  Current level Low High
NZD/USD 0.7490 0.7459 0.7580
AUD/USD 0.9793 0.9753 0.9859
NZD/AUD 0.7650 0.7641 0.7700
AUD/NZD 1.3071 1.2972 1.3095
NZD/GBP 0.4737 0.4733 0.4804
NZD/EUR 0.5651 0.5647 0.5708
NZD/JPY 62.93 62.80 63.32
NZD/CAD 0.7566 0.7546 0.7667
 

Australian Home Loans higher

Written by Sam Coxhead on December 8th, 2010.      0 comments

11:48 AM (AEST) Australian Home Loans data released showed a 1.9% increase vs an expectation of +0.1%. Interestingly, initially this caused a small rally in the AUD, which was immediately reversed and sits lower after what was a positive number. This morning the NZD and AUD have both been heavy, although are sitting 10-20pts off their lows. The Asian markets seem quiet, so conceivably we may have to wait for London’s lead to see if we can leg lower again from here.
 
Overnight saw mixed markets, which on balance saw a stronger USD as bond yields pushed well higher through resistance levels. These moves were made as investors sold bonds and bought equities on the news that Obama had managed to pass some toned down tax changes. Interestingly, yield on the US 10yr bond is now over 50pts higher than when the Fed announced the detail of the second QE program in early November.
 
Focus throughout the next 24hrs will be on the European debt situation and housing numbers due in the UK and Canada.
 
          Last 24 hours trade
  Current level Pre-AUS H/Ls Chge since AUS H/Ls   Low High
NZD/USD 0.7569 0.7573 -0.1%   0.7557 0.7666
AUD/USD 0.9835 0.9842 -0.1%   0.9819 0.9966
NZD/AUD 0.7695 0.7695 0.0%   0.7666 0.7708
AUD/NZD 1.2995 1.2995 0.0%   1.2974 1.3044
NZD/GBP 0.4803 0.4805 0.0%   0.4797 0.4854
NZD/EUR 0.5710 0.5710 0.0%   0.5695 0.5715
NZD/JPY 62.25 62.25 0.0%   62.50 63.48
NZD/CAD 0.7648 0.7648 0.0%   0.7628 0.7697