Quiet European Morning Following Explosive NZD Moves Overnight

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RBNZ Sends NZD Sinking

A quiet data sheet today saw limited moves over the European morning following explosive moves in NZD last night. This came in response to the RBNZ rate decision. While the bank kept policy unchanged, NZD was sent reeling as the bank downgraded its global and domestic economic outlook. The bank stated that a rate cut is more likely to be the next policy adjustment. NZDUSD is now trading back below last week’s .6826 level following the release of the statement.

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US Consumer Confidence Miss Weighs on USD

The US Dollar is trading a little softer today following a weaker than expected US Consumer Confidence report for March yesterday. This has seen the index reversing the week’s gains to trade back below yesterday’s 96.34 high.

Draghi Says Rate Hikes Can Be On Hold If Needed

In Europe, ECB President Draghi spoke this morning, reaffirming the bank’s message that rate hikes can be put on hold if necessary in light of the ongoing downturn in both the global and economic economies. However, Draghi added the caveat that he is confident the eurozone is still on course to meet the bank’s inflation target due to solid labor market conditions. EURUSD has been supported this morning trading back above yesterday’s close to print 1.1285 highs so far today.

GBP Soft Ahead of Parliamentary  Vote

In the UK, GBPUSD has stagnated ahead of the next milestone in the ongoing Brexit negotiations. MPs are due to field their “indicative votes” today on how they wish to proceed with Brexit. Strong support for a lengthier Brexit delay or a second referendum, is likely to support GBPUSD which is currently back below yesterday’s 1.3261 highs.

SPX500 Down Ahead of Trade Talks

Following initial strengthening at the start of the week, risk appetite has softened slightly midweek with SPX500 trading back below the 2818.07 level. The giveback is likely in response to comments from a senior US official, ahead of this week’s US/China trade talks, noting that a trade deal likely won’t come till May or June. However, any positive headlines around this week’s talks (starting tomorrow) should see equities higher.

Safe Haven Inflow Boosting JPY

This risk-off tone can be seen clearly in the safe havens today with both JPY and gold trading higher. USDJPY is now retesting the 110.36 level which was broken yesterday. A move back below here could see a resumption of the bearish move over recent days. Upside in gold has been a little more contained with price trading back up into the middle of this week’s range around 1318.40.

Crude Down Ahead of EIA Report

Oil prices have softened a little mid-week also, though for now remain above the key 59.02 level. Looking ahead, traders are waiting for the latest EIA crude oil inventories report due later over the European afternoon today. If we see a continuation to the recent drawdown in stockpiles, this should once again stoke buying in crude.

Commodity Currencies Capped

Softness in oil prices is keeping commodity currencies pressured today with both AUD and CAD down against USD. USDCAD is now trading firmly above the 1.3377 support level touched yesterday while AUDUSD has fallen lower from the bearish trend line from 2018 highs, eyeing support at .7021 once again.

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