The New Zealand dollar continues to head higher this week. Currently, NZD/USD is trading at 0.7196, up 0.35% on the day and close to one percent on the week. The US dollar had a dreadful 2020, and pro-cyclical currencies outperformed against the sagging greenback. In November and December, the New Zealand currency shot higher, climbing an impressive 8.7% during that time. However, the US dollar has looked healthier in the month of January and has held its own against the kiwi. New Zealand has managed to keep a lid on the Covid-19 pandemic, taking advantage of its isolated location and island status. The country did experience a recession in 2020, but roared back with Q3 growth of 14.0%, above the estimate of 12.9 per cent. New Zealand has recovered … [Read More...]

Stock markets are broadly flat on Thursday as numerous central banks held their first policy meetings of the year and earnings season continued. So much focus has been on the transition in Washington and Joe Biden’s inauguration but today we’ve had multiple major monetary policy meetings, albeit no action from the ECB, BoJ or CBRT. All stand ready to act if needed though, albeit in very different ways. ECB committed to hitting inflation target The ECB reaffirmed its commitment to supporting the economy through the Covid crisis, acknowledging the downside risks posed by new strains and lockdowns. There was nothing surprising to come from the release of President Lagarde’s comments shortly after. Everything very much fell in line with what you’d expect from … [Read More...]

The Japanese yen is flat in Friday trade. Currently, USD/JPY is trading at 103.81, down 0.04% on the day. Higher US yields propel dollar higher The US dollar has been a prolonged decline, so much so that on the rare occasion that the greenback records gains it raises eyebrows. This was the case on Thursday, as the dollar was broadly higher against the major currencies. USD/JPY climbed 0.75%, good enough for its best one-day gain since early November. The catalyst for the dollar’s upward move was a rise in US yields, which has pushed the US dollar index close to the 90-level. In the case of the yen, it’s important to keep in mind that USD/JPY is very sensitive to rate differentials … [Read More...]

The euro started out the week with gains but has taken a pause in Wednesday trading. Currently, EUR/USD is trading at 1.2291, down 0.06% on the day. Earlier in the day, the pair hit a high of 1.2349, its highest level since April 2018. On Thursday, the markets will be treated to key releases on both sides of the pond, which could shake up the euro. The eurozone releases CPI reports for December. Inflation remains weak due to the difficult economic landscape, and headline CPI is expected to contract for a fifth straight month, with an estimate of -0.2 per cent. The markets are bracing for a soft Retail Sales report for November, with a consensus estimate of -3.4 per cent. We haven’t seen such a low reading since April, … [Read More...]

Downside risks for oil early in the New Year The start of the new year is bringing lots of optimism on the crude demand recovery front.  Crude prices have a lot of risk events to start the New Year.  The obvious risk is will OPEC+ be too aggressive in returning more crude to the market.  The other risk is will Democrats pull off a shocker and win both Senate races in Georgia, paving the way for a Biden administration to deliver more fiscal support that will send the dollar deeper into freefall and for a clean energy initiative that will curtail US production even further. OPEC+ is dealing with a softer crude demand outlook to start the new year due to the highly anticipated post-holiday coronavirus … [Read More...]

US dollar retreat continues The US dollar continued to beat a modest retreat overnight, weakening across the board versus G-10 and Asian currencies. The dollar index fell 0.38% to 90.00 and has fallen by 0.25% this morning to 89.76. Today’s fall has left the dollar index testing support at 89.75. A daily close below 89.75 tonight signals that further losses to 89.00 are on the cards next week. EUR/USD is testing multi-month highs today, rising to 1.2285 this morning. A daily close at these levels signals further gains to 1.2400 next week. The New Zealand dollar has risen over 1.0% in the past 24 hours to 0.7170 this morning, with the cyclical Australian and Canadian dollars also rising to 0.7645 and 1.2800 respectively. Both the AUD/USD and NZD/USD are testing monthly resistances, and … [Read More...]