Currency Market Analysis

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NZD

Kiwi snaps back to pre-election highs

USD punished as another potential government shutdown approaches.

The New Zealand Dollar looks set for a sixth straight week of gains, to virtually erase all of the post-election losses in the 6 weeks prior to that. The Kiwi smashed through the 0.73 barrier last night and if Greenback negativity continues has the chance to nudge slightly higher in the next few days.

The US Government approaches yet another potential shutdown this Friday, as Democrats hold out supporting a longer term funding deal in an attempt to bring Republicans to the table on immigration. Division in the ruling party, and the recent subpoena of former White House chief strategist Steve Bannon to testify on allegations of Russia's involvement in the 2016 Presidential election, are all having a negative effect on the USD, which hovers near 3 year lows against a basket of currencies.

Dow Jones tops 26000 as stocks explode higher

Risk on trades assist surge in New Zealand Dollar.

There is a certain irony that while political headwinds continue to punish the US Dollar, US stock markets continue to climb to record highs, on the back of a bullish outlook for corporate earnings. Buoyed by the pending corporate tax cuts, and fuelled by an improving US economy, the Dow Jones took just 12 days to add 1000 points this month, the fastest gain of this magnitude in its long 122 year history.

With risk tolerance at all time highs there is little wonder that the risk sensitive Kiwi continues to surge. NZD/JPY, often seen as the best risk barometer in currency markets, hit 4 month highs overnight, touching the 81.00 level.

Aussie unemployment, Chinese GDP watched

AUD exporters hoping for some solid numbers to drive cross rate lower.

Australian unemployment has enjoyed a stellar run of late, and has led to some speculation that the Reserve Bank of Australia may be the first of the antipodeans to move on interest rates later this year. Markets are expecting around 13K jobs to be added in December in the "Lucky Country", while later today Chinese GDP is expected to show 6.7% growth. If both sets of data surprise to the upside NZD/AUD should test out the 0.90 handle.