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Morning Brief: 14/04/2021
The New Zealand dollar is on the rise against the US dollar this morning, despite the dovish RBNZ policy statement earlier today where the central bank kept interest rates unchanged and the communicated that they remain in “wait and see” mode.
Weakness in the US dollar index is the main driver of strength behind the kiwi today, rather than anything that the RBNZ said. The central bank policy statement dovish noted that the nations employment and inflation remit is still far away from normal levels.
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Central bank action was also in play across Asia this morning. The Monetary Authority of Singapore kept rates unchanged, however, the Singapore dollar popped higher after data revealed that the Singapore economy unexpectedly grew during the first fiscal quarter.
Aside from central bank action the main focus is on US dollar weakness this morning, as the market takes yesterday’s strong CPI inflation number in its stride. RBC bank has put out a note this morning warning that yearly US CPI could hit 5 percent.
Two big trades that foreign exchange traders are watching now are the EURUSD and the USDJPY. The EURUSD pair is well above its 200-day moving average, and trades at a six-week high this morning towards the 1.2000 handle.
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The USDJPY pair is also suffering this morning due to US dollar weakness and is testing critical support. Geo-political risks are also weighing on the USDJPY, as Ukraine and Russian tensions ratchet up.
Both WTI oil and Brent oil are trading towards the best levels of the week, and appear to have embraced the strong CPI number, and looked past the recent news about the Johnson & Johnson vaccine.
Gold and silver prices have risen sharply as the US dollar declines. The yellow metal now needs to break past the $1,756 level to encourage the next major push higher towards the $1,810 technical area.
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Bitcoin has hit a new all-time today and is trading above the $64,000 level, after breaking above the $61,800 level yesterday. Optimism over today’s Coinbase IPO on the Nasdaq is causing crypto euphoria.
Data Watch
The economic calendar in the European session is very slow this morning, with the release of yearly and monthly eurozone industrial production data the main event that traders will be watching out for.
During the United States trading session a scheduled speech from ECB President Christine Lagarde, and Federal Reserve head Jerome Powell healdine. Both speeches have the ability to rock financial markets.
Market participants also have the release of the FED Beige Book to look forward during the latter part of the US session, and scheduled speeches from Federal Reserve members Clarida and Williams.
