Daily FX Wrap: USD traded in negative territory throughout the day, while Norway and Taiwan cut rates to take the total number of central banks to ease this year to 40.
NZD was the notable outperformer during Asian hours after Fonterra (ASX:FSF) revised its 2015/16 milk forecast upward, with milk exports making up a large proportion of the New Zealand economy. The NZD strength saw the currency gain against both the USD and AUD, with AUD/NZD seeing stop losses and long liquidations on the back of the news, thereby seeing weakness in AUD across the board.
The European and US sessions saw safe haven flows move towards both EUR and JPY, with damp sentiment felt in equities, weighed on by carmakers after German press suggested that BMW (XETRA:BMWG) may also be implicated in the recent emissions saga. Furthermore, EUR was further bolstered by German IFO data, with two of the three components beating on expectations. Strength in EUR and JPY strength weighed on the USD, with the greenback shrugging off a number of better than expected data releases (Durable Goods Orders M/M -2.00% vs. Exp. -2.30%, New Home Sales M/M 5.70% vs. Exp. 1.60%) to end the European session firmly in the red.
Away from major currencies, two central banks have lowered their interest rates today to take the total number of central bank to ease this year to 40. The Norges Bank unexpectedly lowering their deposit rate by 25bps to 0.75%, after seven of the 17 surveyed analysts forecast a rate cut citing weaker consumer and business surveys as well as a weaker oil outlook, however, the majority of analysts believed that the central bank would hold off until later in the year. Elsewhere the Taiwan central bank also unexpectedly cut their key interest rate by 12.5 bps to 1.75%, with the news reported by sources ahead of the official release, while separately Israel, Czech Republic and the Philippines all saw their respective central banks keep rates on hold.
Looking ahead, tomorrow sees the tertiary reading of US GDP, the final reading of University of Michigan sentiment and Japanese CPI as well as comments from ECB’s Weidmann and Fed’s Bullard and George.