APAC Morning Update - 15/02/21

The NZDUSD opens at 0.7218 and the AUDUSD opens at 0.7752

Level 3 lockdown for Auckland to kick off your Monday, how exciting. It is a US Public holiday today which will be affecting settlements as per usual, but do be a little mindful of moves in the NZD in a relatively illiquid market. Remember a lot of the strength in the Kiwi and Aussie is predicated on the fact that the economies have relatively few Covid restrictions. A short sharp lockdown may not move things too much, but keep in mind that if this lockdown got extended - a move would not necessarily be considered unprecedented- then that could really start to weigh on the Kiwi.

In slightly more classic financial news, the US 30 year yield keeps creeping up, and is almost at 2%. This was down at 1.3% only 6 months ago, so quite a large move. As inflation expectations rise, (3.3% over the weekend), so the yield people demand increases. A higher yield makes the US more attractive to park your money, and therefore increases demand for the USD. However it also makes borrowing more expensive, and with so much of the stock market running on cheap money, it is extra sensitive to borrowing costs. So you can almost get a bit of a quadruple whammy, natural USD strength, coupled with a risk off mood, a side of Covid lockdowns, all wrapped up in thin liquidity. What could possibly go wrong?

From a housekeeping perspective, not our first lockdown rodeo at XE, so there shouldn’t be any changes compared to normal.

Global equity markets are up: Dow +0.1%, S&P 500 +0.5%, FTSE +1.0%, DAX +0.1%, CAC +0.6%, Nikkei -0.1%, Shanghai +1.4%.

Gold prices are off 0.7%, currently trading at $1,824 an ounce. WTI Crude Oil prices are up 2.1% trading at $59.7 a barrel.

NZDUSD 0.7218 -0.2%
NZDEUR 0.5955 -0.1%
NZDGBP 0.5212 -0.4%
NZDJPY 75.74 0.0%
NZDAUD 0.9306 -0.2%
NZDCAD 0.9162 -0.1%
GBPNZD 1.9172 0.3%

AUDUSD 0.7752 -0.1%
AUDEUR 0.6395 0.0%
AUDGBP 0.5596 -0.3%
AUDJPY 81.39 0.1%
AUDNZD 1.0740 0.1%
GBPAUD 1.7845 0.2%