Global Themes

NZD

Political maelstrom fails to unseat Pound

Increasing likelihood of a Bexit extension.

The financial markets interpreted the historic defeat of Theresa May’s Brexit proposal favourably, seeing the British Pound recover nearly all of the 2% drop proceeding the vote. The recovery was supported by the view a ‘no deal’ Brexit is now less likely on the 29th March and increased odds of a softer Brexit materialising or potentially no Brexit at all. This morning saw the House of Commons vote down opposition leader Jeremy Corban’s no confidence motion and so the next step in the saga is another vote on an amendment to the Brexit proposal on Monday UK time. As the clock ticks down it appears increasingly likely an extension to Article 50 will be necessary and potentially a second referendum if progress can’t be made by parliament..

Kiwi softer in face of upbeat US data

U.S. delivered improved Housing and Import Prices.

Overnight saw broadly positive data out of the US with the NAHB Housing Market Index improving in January after hitting a 3 year low and import prices declining less than expected in December. Led by the sharp drop in oil in Q4, import prices dropped 1% in the month after a 1.9% decline in November. The NZD drifted lower in the offshore session, seeing it give up the 0.68 handle and testing support at 0.6750. For now, it remains in an uptrend with key resistance at 0.6880.

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