NZD Outperforms Other Major Currencies

The New Zealand Dollar outperformed other major currencies through the European session as NZD/USD appreciated to US$ 0.8358, EUR/NZD fell to NZ$ 1.6224, NZD/JPY bettered to ¥82.13, and GBP/NZD sank to NZ$ 1.9117. Traders rewarded NZD after data there saw the September performance services index improve to 55.6 from the prior reading of 53.3 while September REINZ house sales skyrocketed a major 19.0% y/y and house prices were up +0.8% m/m. The real estate sector in NZ remains blistering but it is expected to moderate as RBNZ instituted property loan restrictions on 1 October to slow the torrid sector. Q3 consumer prices will be released on Wednesday followed by October confidence numbers on Thursday.

The Australian Dollar was broadly weaker against major peers through the European session as AUD/USD weakened to US$ 0.9428, EUR/AUD appreciated to A$ 1.4379, AUD/JPY fell to ¥92.50, and AUD/CHF depreciated to CHF 0.8572. The catalysts for A$’s move lower were both weaker Aussie data and unexpectedly mixed Chinese data. Aussie data saw August home loans recede 3.9% compared with the prior reading of +2.1% as the value of loans fell 1.9% m/m. Also, August investment lending printed at +0.0%, down from the prior reading of +2.9%. Minutes from RBA’s October policy meeting will be released tomorrow. Chinese numbers wrongfooted the market as it was reported the trade balance moderated to US$ 15.21 billion in September from the prior US$ 28.52 billion in August, far below expectations as exports actually contracted 0.3% y/y, down from the prior reading of +5.5% y/y. Other Chinese data saw September CPI pick up to +3.1% y/y, up from August’s +2.8% y/y reading, and PPI improved to -1.3% y/y, up from the prior reading of -1.5%.

The Euro was mixed against major peers through the European session as EUR/USD improved to US$ 1.3568, EUR/JPY softened to ¥133.04, EUR/GBP fell to £0.8482, and EUR/CHF moved lower to CHF 1.2328. Eurozone finance ministers are convening today to discuss many issues including the possibilities that Spain, Ireland, and Portugal might be able to leave their financial assistance programs, and also to discuss Greece’s ongoing progress and economic improvements. ECB rate-setter Coeure reiterated the ECB’s monetary policy needs to remain accommodative for an “extended” period and predicted the economic recovery will remain weak in the coming months. Excess liquidity in the Eurozone’s banking system has fallen to about €216 billion, close to the €200 billion level the ECB has identified as a floor. Short-term interbank lending rates are moving higher and these factors will likely result in additional stimulus programs from the ECB, possibly including new LTROs. ECB’s Noyer echoed Coeure’s sentiment, adding the Eurozone may take longer to terminate its monetary accommodation. Noyer also warned of violet consequences if there is a US debt “accident.” Eurozone industrial production numbers from August will be released today.

The Swiss franc searched for direction through the European session as USD/CHF moved lower to CHF 0.9091, CHF/JPY depreciated to ¥107.81, GBP/CHF slumped to CHF 1.4519, and CAD/CHF weakened to CHF 0.8765. SNB Chairman Jordan defended the central bank’s EUR/CHF 1.2 floor over the weekend, saying it is required to avoid a tightening of monetary conditions in his country, adding it is a “crucial tool” of monetary policy. Data to be released in Switzerland today include September producer and import prices.

Gold and Silver were mixed through the European session as Gold climbed to US$ 1278.41 and was supported at US$ 1268.70 while Silver appreciated to US$ 21.453 and was supported at US$ 21.097. The ongoing US government shutdown and lack of a deal to increase the US’s borrowing capacity by raising the debt ceiling is giving the Metals complex some pause. The US’s borrowing authority lapses on 17 October and US officials are scurrying to find a compromise during the first half of this week. Gold remained on the defensive today as traders continued to pare holdings ahead of a likely decision by the FOMC over the next couple of months to taper its quantitative easing policies. Gold is expected to register its first annual loss since 2000 this year and holdings in the SPDR Gold Trust, the largest bullion-backed ETP, fell to 890.98 metric tons on Friday, the lowest since February 2009. Gold was also pressured lower today in the wake of weak Chinese trade numbers.

Crude Oil appreciated through the European session as Brent futures strengthened to US$ 110.39 and were supported at $110.25 while WTI futures appreciated to US$ 101.96 and were supported at $101.84. Some traders are anticipating that a deal to reopen the US government and increase the US’s borrowing authority will be reached this week, allowing the US to avoid a technical default on its debt. The premium between European benchmark crude and WTI futures is now US$ 9.34, its widest gap since June. Chinese trade data revealed it imported a record 25.61 million metric tons of crude last month.