APAC Morning Update - 25/02/21

The NZDUSD opens at 0.7445 and the AUDUSD opens at 0.7966

New Zealand:
The NZD has continued its groundhog day rise after the RBNZ announcement yesterday, once again confirming their dovish stance with an unchanged monetary stance.

So the cash rate will stay at 0.25% and money printing will target $100 billion of bonds to purchase by June next year.

Governor Orr stated economic uncertainty around the COVID virus, and restrictions on business and spending are still a big factor in the RBNZ decision making and are willing to let things “run for a while" and wear episodes of inflation rising above 2%.

Australia:
The AUD has hit three year highs overnight, with a continuous demand for Australian commodities, and investors buying heavily into risk currencies such as the AUD has spurred another rally.

0.8000 is now firmly in sight, and with the RBA still reiterating a lower for longer policy with interest rates, and a commitment to stimulus to assist what looks a well-managed COVID response, the AUD looks an attractive proposition for offshore buyers.


Stars and Stripes:
USD weakness is still alive and well as another dovish testimony from Fed Chair Jerome Powell raised concerns about rising inflation. Powell stated that US interest rates will remain low and Bond purchases will support the US economy.

The Fed’s commitment to low rates has some investors worried that inflation could spike with further stimulus, but all it has done so far is send money into currencies linked to commodities and global trade, such as the NZD and AUD.


Where to from here:
Even with the talk of inflation around, and rising yields, we still have not seen this flow through to the currency markets, and the NZD remains strong. Importers keep working orders higher, and exporters, even though it's tough at the moment, keep looking for any dips and take advantage of them.

Global equity markets are mixed: Dow +1.4%, S&P 500 +1.2%, FTSE +0.5%, DAX +0.8%, CAC +0.3%, Nikkei -1.6%, Shanghai -2.0%.

Gold prices are off 0.3%, currently trading at $1,800 an ounce. WTI Crude Oil prices are up 2.5% trading at $63.22 a barrel.

NZDUSD 0.7445 1.5%
NZDEUR 0.6123 1.4%
NZDGBP 0.5270 1.3%
NZDJPY 78.88 2.1%
NZDAUD 0.9353 0.8%
NZDCAD 0.9322 0.8%
GBPNZD 1.8975 -1.3%

AUDUSD 0.7967 0.8%
AUDEUR 0.6547 0.6%
AUDGBP 0.5636 0.5%
AUDJPY 84.37 1.4%
AUDNZD 1.0706 -0.6%
GBPAUD 1.7743 -0.5%

Upcoming Data releases (NZST)

13:00 - ANZ Business Confidence
13:30 - AU - Private Capital Expenditure q/q
02:30 - US - Prelim GDP q/q