The Opening Bell: Where currencies start on Monday, January 7, 2019

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By Dan Bell

On Thursday morning last we endured some extreme volatility in the wake of Apple downgrading it’s revenue forecast, and the fact that they pointed the finger squarely at a slow-down in China.

Understandably, a risk off move like this affected the Japanese Yen the antipodean currencies most aggressively, and the sell-off was exacerbated by the lack of liquidity around this time of the year.

Having said that, over the course of Thursday those moves were largely retraced and the market seemed to move on very quickly, confirming that the extreme volatility was more to do with liquidity constraints rather than the news itself. 

Friday brought us a continuation of the rebound, which was buoyed late in the trading session on the strong US Non-Farm Employment print (+312k vs. +179k expected), despite a jump in the Unemployment Rate, moving from 3.7% up to 3.9%. A little later we saw the US Fed Governor Powell speaking, which was received as being more dovish than expected, reigning in the markets expectations for future hikes. US stocks rallied hard, now up over 3% on the day, and risk seems to have broadly traded higher.

The Canadian Dollar took off to the upside overnight also, further supporting the commodity currency complex. after printing strong than expected Employment numbers, and with oil rallying over 2.5%.

Looking to the week ahead, we are light on the domestic data front, so we will look to developments offshore for direction.

Global equities are higher: Dow +3.2%, S&P 500 +3.3%, FTSE +2.1%, DAX +3.3%, CAC +2.65%, Nikkei +0.4%, Shanghai +2%.

Gold prices are down 0.7% currently trading at $1,285 an ounce. WTI Crude Oil prices surged 2.5% higher trading at $48.3 a barrel.

Current indicative rates:

NZDUSD0.6725+0.3%
NZDEUR 0.5900+0.3%
NZDGBP0.5285-0.1%
NZDJPY73.10+1.0%
NZDAUD0.9465-0.8%
NZDCAD0.9010-0.2%
GBPNZD1.8900+0.2%

 

 

 

 

 

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Dan Bell is the senior currency strategist at xe money transfer in Auckland. You can contact him here »

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Source: CoinDesk

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