FX Update

FX Update: Risk Appetite Dwindling

Market Overview

Key Points:

• Worldwide coronavirus cases surpass 413.645 million with over 5.842 million official
deaths.
• New Zealand has 981 active cases of coronavirus with 39 people in hospital. The NZ border will reopen in stages from the 27th of this month in a 5 step plan of self-isolation for travellers to reduce the MIQ facilities.
• Ukraine has been informed that Wednesday will be the day of an attack from Russian forces
• US 1 year inflation expectations fall back to 5.8% from 6.0%
• Australian weekly consumer confidence 103 vs 99 prior
• Crude Oil is being supported by fears over a Russian invasion of Ukraine with predictions the commodity could push price over $100/barrel

Major Announcements last week:
US CPI m/m up 0.6% to 7.5% y/y
NZ Inflation expectations print 3.27% vs 2.96%
UK prelim GDP fourth Q 1.0%, down from 1.3% in the third quarter of 2021
NZ House prices seasonally adjusted m/m up 1.4%

Direct FX

Economic Releases

Tuesday 15/02
2:30am, USD, FOMC Member Bullard Speaks
5:15am, EUR, ECB President Lagarde Speaks
1:30pm, AUD, Monetary Policy Meeting Minutes
11pm, EUR, ZEW Economic Sentiment
Forecast: 54.4
Previous: 49.4
11pm, EUR, German ZEW Economic Sentiment
Forecast: 55.1
Previous: 51.7

Wednesday 16/02
2:30am, USD, PPI m/m
Forecast: 0.50%
Previous: 0.20%
2:30am, USD, Core PPI m/m
Forecast: 0.50%
Previous: 0.50%
2:30am, USD, Empire State Manufacturing Index
Forecast: 11.9
Previous: -0.7
8pm, GBP, CPI y/y
Forecast: 5.40%
Previous: 5.40% Read more

Kiwi Reverses Losses

Market Overview

Key Points:
• Worldwide coronavirus cases surpass 400.040 million with over 5.778 million official deaths.
• New Zealand has 202 active cases of coronavirus with 14 people in hospital. The NZ border will reopen in stages from the 27th of this month in a 5-step plan of self-isolation for travellers to reduce the MIQ facilities.
• Federal Reserve poses rate hikes in March and May to curb rising inflation
• The potential of a war between Russia and Ukraine looks to have deteriorated, although Russia said they would be ready for war in the second week of Feb – we are in this window now
• ECB inflation risk post the ECB has been upwardly reviewed although medium term inflation is not expected to tick over 2.0%
• ANZ predicts the RBA to hike interest rates as early as June, CBA are still tipping an August hike Read more

Economic Releases

Monday 07/02
All Day, NZD, Bank Holiday

Tuesday 08/02
4:45am, EUR, ECB President Lagarde Speaks
3:15pm, NZD, RBNZ Gov Orr Speaks

Wednesday 09/02
3pm, NZD, Inflation Expectations q/q
Previous: 2.96%

Thursday 10/02
6am, CAD, BOC Gov Macklem Speaks
6am, USD, FOMC Member Mester Speaks
7:01am, USD, 10-y Bond Auction
Previous: 1.72/2.5
10:05pm, GBP, BOE Gov Bailey Speaks
11pm, EUR, EU Economic Forecasts Read more

Economic Releases for the Week!

Monday 31/01
All Day, CNY, Bank Holiday

Tuesday 01/02
All Day, CNY, Bank Holiday
4:30pm, AUD, Cash Rate
Forecast: 0.10%
Previous: 0.10%
4:30pm, AUD, RBA Rate Statement

Wednesday 02/02
2:30am, CAD, GDP m/m
Forecast: 0.40%
Previous: 0.80%
4am, USD, ISM Manufacturing PMI
Forecast: 57.4
Previous: 58.7
4am, USD, JOLTS Job Openings
Forecast: 10.35M
Previous: 10.56M
10:45am, NZD, Employment Change q/q
Forecast: 0.40%
Previous: 2.00%
10:45am, NZD, Unemployment Rate
Forecast: 3.30%
Previous: 3.40%
All Day, CNY, Bank Holiday
2:30pm, AUD, RBA Gov Lowe Speaks
All Day, All, OPEC-JMMC Meetings Read more

Risk currencies struggle in 2022

Market Overview

Happy New Year to all Direct FX clients and readers.

The 2021 festive season was less volatile than 2020 but we still saw a fair amount of thin trading with some reasonable swings taking place.

It will take a couple of weeks yet before currency pairs are back in full as market participants filter back into markets.

The kiwi and Aussie have both started 2022 against the wall, underperforming on risk factors, the worst performing currencies contrasting to the safe haven Japanese Yen the strongest. Read more

Economic Releases

Monday 24/01
9:30pm, EUR, German Flash Manufacturing PMI
Forecast 56.9
Previous 57.4
9:30pm, EUR, German Flash Services PMI
Forecast 47.9
Previous 48.7

Tuesday 25/01
1:30pm, AUD, CPI q/q
Forecast 1.00%
Previous 0.80%
1:30pm, AUD, Trimmed Mean CPI q/q
Forecast 0.70%
Previous 0.70%

Wednesday 26/01
All Day, AUD, Bank Holiday Read more

Last Commentary of 2021.

This will be the last commentary for 2021. We will be back with our first commentary for the 2022 year in the second week of January.
We appreciate all your comments and support over what has been an unprecedented year!
We are only closed for the statutory holidays and will be open for trading on the days in between Christmas and New Year.
We would like to wish all our clients a Happy Christmas and safe start to what we all hope will be a much improved New Year.
The Direct FX Crew; Nev, Glenn and team

Key Points:
Worldwide coronavirus cases surpass 275.826 million with over 5.377 million official
deaths.
New Zealand has 2219 active cases of coronavirus with 95 new cases today and 1 death. Meanwhile, the Australian State of New South Wales reported 2213 new cases and 1 deaths yesterday with Victoria reporting 1510 new cases with 7 deaths
RBA governor Lowe reiterates he is in no hurry to raise interest rates
NZ Consumer Confidence data 98.3 in December from November’s 96.6
The Bank of Japan has upgraded its assessment of the economy for the first time since mid 2020
Equity markets trade off recent lows back in the black this week, an early christmas present for investors
NZ will reduce the covid vaccine booster gap wait from 6 months to 4 months due to Omicron
The United States Dollar (USD will close out 2021 as the strongest main currency with the Japanese Yen (JPY) as the weakest. What’s interesting about this is that both are considered ‘safe haven” currencies.

Economic Releases

Tuesday 21/12
1:30pm, AUD, Monetary Policy Meeting Minutes

Wednesday 22/12
2:30am, CAD, Core Retail Sales m/m
Forecast: 1.70%
Previous: -0.20%
2:30am, CAD, Retail Sales m/m
Forecast: 1.00%
Previous: -0.60%

Thursday 23/12
2:30am, USD, Final GDP q/q
Forecast: 2.10%
Previous: 2.10%
4am, USD, CB Consumer Confidence
Forecast: 110.5
Previous: 109.5
4am, USD, Existing Home Sales
Forecast: 6.55M
Previous: 6.34M
Tentative, JPY, BOJ Gov Kuroda Speaks Read more