EUR/USD gains almost 100 pips amid USD weakness, while NZD recovers some of last week’s losses ahead of tomorrow’s RBNZ rate decision.
Relatively light macro newsflow today has seen the USD reside in negative territory, coming off recent highs. Recently, the USD-index has been trading at its highest level since April; however, today has seen a slight paring of these gains, as some suggest that the September rate hike touted by Fed’s Bullard (Non-Voter, soft hawk) may appear too soon and therefore out of reach after a spate of weaker than expected earnings. The notable beneficiary of the weaker greenback has been EUR, with EUR/USD ending the session higher by almost 100 pips, as EUR is also benefiting from inflows as a consequence of higher Bund yields.
Antipodeans were in focus in the Asia-Pacific session with AUD/NZD notably underperforming in the wake of RBA minutes, where the RBA reiterated that further AUD depreciation is likely and needed. This saw temporary weakness in AUD, before the currency went on to pare much of its losses throughout the European and US sessions, as the commodity currency benefited from commodity strength. Elsewhere, NZD continued to extend on gains seen this week, after NZ finance minister English stated that dairy prices could recover by year-end; this comes as last week saw Fonterra’s GlobalDairyTrade auction reach 6 year lows.
Looking ahead, antipodean currencies may be in focus again tomorrow, with the comments from RBA Governor Stevens and the release of Australian CPI, while the RBNZ rate decision is expected to see the central bank cut rates. Elsewhere, participants will be looking out for US existing home sales and BoE minutes from their July meeting.