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11 Dec 2014
AUD and NZD hold up well amidst soft commodities - BTMU
FXStreet (Barcelona) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ, notes that AUD and NZD help up well inspite of weakness in commodity prices, further deriving support from the Australian employment report and RBNZ’s decision to keep rates on hold.
Key Quotes
“The commodity-related currencies of the Australian and New Zealand dollars have held up relatively well overnight amidst weakness in commodity prices which are leading to an ongoing deterioration in their terms of trade. The Australian dollar has derived support from the release of the stronger than expected Australian employment report for November. The report revealed that employment increased by 42.7k in November which compared to the average monthly increase over the last six months of around 13k.”
“The unemployment rate also continued to trend higher rising by 0.1 percentage point to 6.3% as the labour force participation rate also increased by 0.1 percentage point. Overall the report signals that the labour market remains soft as evident by the underemployment rate rising to a new record high of 8.6% in November. Investor expectations for a further loss of economic momentum in 2015 will keep alive expectations for additional RBA rate cuts next year as well weighing on the Australian dollar.”
“The New Zealand dollar has derived support overnight from the RBNZ’s latest monetary policy meeting at which it retained although softened its tightening bias. The RBNZ acknowledged that inflation has been weaker than expected which prompted it to lower its interest rate profile. The RBNZ has pushed out the timing of the next rate hike until 2H 2015 and lowered the projected peak of the interest rate cycle by 0.25 point to 4.25%.”
“RBNZ Governor Wheeler has stated that he was surprised that the New Zealand dollar jumped after today’s meeting given the signal that rates are on hold for longer. He added that the dairy price decline should weigh on the New Zealand dollar and that it may be the start of a significant upswing for the US dollar.”
Key Quotes
“The commodity-related currencies of the Australian and New Zealand dollars have held up relatively well overnight amidst weakness in commodity prices which are leading to an ongoing deterioration in their terms of trade. The Australian dollar has derived support from the release of the stronger than expected Australian employment report for November. The report revealed that employment increased by 42.7k in November which compared to the average monthly increase over the last six months of around 13k.”
“The unemployment rate also continued to trend higher rising by 0.1 percentage point to 6.3% as the labour force participation rate also increased by 0.1 percentage point. Overall the report signals that the labour market remains soft as evident by the underemployment rate rising to a new record high of 8.6% in November. Investor expectations for a further loss of economic momentum in 2015 will keep alive expectations for additional RBA rate cuts next year as well weighing on the Australian dollar.”
“The New Zealand dollar has derived support overnight from the RBNZ’s latest monetary policy meeting at which it retained although softened its tightening bias. The RBNZ acknowledged that inflation has been weaker than expected which prompted it to lower its interest rate profile. The RBNZ has pushed out the timing of the next rate hike until 2H 2015 and lowered the projected peak of the interest rate cycle by 0.25 point to 4.25%.”
“RBNZ Governor Wheeler has stated that he was surprised that the New Zealand dollar jumped after today’s meeting given the signal that rates are on hold for longer. He added that the dairy price decline should weigh on the New Zealand dollar and that it may be the start of a significant upswing for the US dollar.”