APAC Morning Update - 23/02/21

Xe Corporate APAC

February 23, 20213 min read

The AUDUSD opens at 0.7915 and the NZDUSD opens at 0.7340

The AUDUSD continues to charge higher and is starting to come into the 2016-2018 highs of 0.8000 to 0.8100, same can be said for the NZDUSD - 0.7400 to 0.7500 respectively. It has been pretty unstoppable so far, but you would think it would have some work to do to break above those levels.

In the short term though, there could be a little profit taking in NZ, or rather the market might not want to go into tomorrow’s RBNZ meeting too stretched. Adrian Orr, the RBNZ Governor has competing issues. If we forget about the elephant not quite in the room (inflation), he has to balance housing and the NZD. Remember as a general rule, central banks prefer their currencies lower, as that makes exports relatively cheaper, and is therefore good for the economy as a whole. The NZD has moved 33% higher in under a year, which will start to be a concern. He will want to talk it down, but if not actually moving rates, talking about the potential for negative rates, lower for longer etc etc. However on the other hand we have housing which is also up a good 15% year on year, and if that continues too much, risks financial stability. How do you control housing? Talk about the potential for rates to rise in the near future, lower for less time…

You can see the tightrope that needs to be walked. In practice he will probably keep everything as is on an OCR level, while maintaining the dovish stance for the future to try and sort the currency, while also increasing LVR’s to try and get a handle on housing. The risk of course is he does not do this, and the implications for the NZD in terms of potential movement is large either way.

Retail sales is out at 10:45 in NZ today. This is a quarterly figure, and last quarter was up 28%, so there could well be a big variation around the -0.5% expected, but beyond a knee jerk, probably do not read into it as much as you normally would.

Global equity markets are mixed: Dow +0.5%, S&P 500 -0.2%, FTSE -0.2%, DAX -0.3%, CAC -0.1%, Nikkei +0.5%, Shanghai -1.5%.

Gold prices are up 1.6%, currently trading at $1,809 an ounce. WTI Crude Oil prices are up 3.2% trading at $61.7 a barrel

AUDUSD 0.7915 0.5%
AUDEUR 0.6513 0.2%
AUDGBP 0.5630 0.1%
AUDJPY 83.17 0.2%
AUDNZD 1.0801 0.1%
GBPAUD 1.7764 -0.2%

NZDUSD 0.7340 0.7%
NZDEUR 0.6032 0.2%
NZDGBP 0.5211 0.0%
NZDJPY 77.10 0.3%
NZDAUD 0.9263 -0.1%
NZDCAD 0.9248 0.6%
GBPNZD 1.9186 0.0%