Forex Afternoon Wrap – 14/05

Key Notes:

• New Zealand Business manufacturing index 51.8 vs. 54.6 previously
• New Zealand retail sales q/q 2.7% vs. 1.6%; core retail sales 2.9% vs. 1.5%
• UK RICS house price balance 33% vs. 22%
• Japan preliminary machine tool orders y/y 10.4% vs. 14.9% previously
• Canada NHPI m/m 0.0% vs. 0.2%
• US PPI m/m -0.4% vs. 0.1%; Core PPI m/m -0.2% vs. 0.1%
• US weekly unemployment claims 264k vs. 272k

Later:

• ECB President, Mario Draghi speech

Kiwi Rebounds, US data remains subdued

The Asian trading session saw the release of the retail sales data from New Zealand, which posted impressive growth for the quarter, beating estimates on both the headline and the core. The New Zealand dollar got some respite from the retail sales data after the currency turned weak for the past few weeks. The Kiwi was seen trading at 0.751 after the currency managed to reverse from the previous lows of 0.737.

There wasn’t much of news from Australia and the Aussie dollar continued to firm up above the 0.8 handle which has now turned to support. The Aussie is currently struggling near 0.809 and break above this level could see further gains in the Australian Dollar against the Greenback in the near term.

There was a bit of economic data from Japan but nothing major as the Yen continues to turn weaker across the board, with the exception of the US Dollar. At the time of writing, USDJPY was trading near 119.130 levels.

The European session was relatively quiet with Germany, France and Switzerland closed due to bank holidays while there was no data from the UK. Trading was mostly quiet with the Euro continuing to post gains across the board, including the Aussie and the Kiwi dollars besides the Greenback. EURUSD was trading near 1.142 at the time of writing after the short term pivot level of 1.13575 was broken.

The Pound Sterling was also trading higher although the currency seems to be losing its momentum near 1.579 region. The Cable now seems to be trading purely off the USD weakness if anything else.

The US trading session opened with data from Canada and the US.

Canadian housing price index remained flat for the month with 0% growth, below estimates of 0.2%. The Canadian dollar was little changed on the news but was weaker against stronger currencies such as the Aussie and the Euro.

The US data included the producer price index, which fell below expectations on both the headline and core. PPI, which is seen as an early indicator of consumer inflation posted negative numbers, contracting -0.4% and -0.2% on the headline and core respectively. The US Dollar Index continues to be under pressure as the trade weighted index was seen trading near 93.3 at the time of writing. The next major support for the US Dollar comes at 92.5 followed by 91.5 and 90.5. Each of these levels could offer some kind of bounce to the US Dollar Index in the short term.

There is no more news events for the day with the exception of ECB Chief, Mario Draghi due to give a speech later this evening.