The U.S. dollar gave way to the New Zealand dollar (NZD) early in the Asian trading (8:30 p.m. EDT – 11:00 p.m.) when New Zealand Merchandise Terms of Trade jumped by 4.1% for Q1. It’s the first positive result since a December of 2011. New Zealand Merchandise Terms of Trade has seen 6 consecutive quarters of decline.
The currency markets are starting off the week under pressure on growing concerns over the crisis in the euro zone.
Last week I spoke about the disconnect in the AUD/USD currency pair despite global growth and progress, albeit slower than we would like to see. Nevertheless the trade everywhere has been risk-on.
In the four years since the U.S. Federal Reserve brought rates down to zero, U.S.-based investors are forced to take extra risk and look in less common places to achieve desired income levels. One such place is a closed end fund (CEF) that invests overseas, has a nice current yield and expects to continue a long history of solid performance.
All we the themes in the currency markets have surrounded the U.S. fiscal cliff from the stand point that the U.S. fiscal cliff can be averted. It this sentiment coupled with positive New Zealand economic data has sent the New Zealand dollar higher against the U.S. dollar. The NZD/USD pair hit a 3 week intraday high of 0.82686 in early trading.
With a disappointing, lower than expected Non-Farm Payroll report of 115,000, our playbook triggered the Mexican peso suggested trade.
Traders are already setting up for Friday’s Non-Farm Payroll (NFP) report due out at 8:30 a.m. EDT. The NFP is the biggest single piece of economic data traders attempt to trade. It’s the Super Bowl of data releases.
A quick look at some short term developments and status updates in the currency markets. Sentiment remains going short the USD/CAD and long the USD/JPY.
All eyes will be focused on this Friday’s Non-Farm Payroll (NFP) report due out at 8:30 a.m. EDT. As with any major economic release, currency traders will be positioning themselves ahead of the number.
Traders focus continues to be on euro zone policymakers as they struggle with the region’s debt crisis spreading even further, and fears of what prior agreements may be in jeopardy on the outcome of the French elections. This fear is sending the New Zealand dollar negative for the week as traders sell off riskier assets.