Happy New Year to all Direct FX clients and readers.
The 2019 festive season was less volatile than 2018 but we still saw a fair amount of thin trading conditions with some reasonable swings taking place.
It will take a couple of weeks yet before currency pairs are back in full swing with regular volatility as market participants filter back into markets.
The New Zealand Dollar over the course of 2019 was stronger than the Australian Dollar and the Euro but weaker than all other majors. The Euro turned out the worst performance, with the Canadian Dollar holding a staggering first place even though it’s the only currency to carry a negative yield.
The kiwi has started 2020 on the back foot underperforming on risk factors, the worst performing currency. Tier one data starts next week with NZIER Business Confidence.
We saw a big turnaround in the Global Dairy Auctions with results showing a rise of 2.8% in the overall index from mid December’s negative 5.1% with solid numbers in Butter Milk and Whole Milk Powder products.
Thursday’s mood turned positive with equities bouncing back from losses after improved appetite for risk after Geo-Political uncertainty eased. President Trump and Iran confrontations calmed after the US assassination of Qassem Soleimani, Iran’s most powerful military leader. Iran has said they would retaliate but Trump made comment that any come back would be met by the US targeting “Iranian Culture Sites”. This implies committing war crimes – but is most likely to just be threats.
Data out in the US showed the Trade Deficit shank to 43.1B for November making the lowest level during the Trump administration since October 2016 from 46.9B. US Manufacturing index data rose in December to 55.0- This is particularly evident given Manufacturing has been part of the backbone to the rise of the US economy over recent months. Week’s end US Non-Farm Payroll is the focus with Unemployment expected to remain at 3.5%