Asia Pacific Market Open Talking Points
- US Dollar gains as New Zealand Dollar, British Pound fall
- BoE highlighted debate over stimulus, Brexit woes lingered
- Japanese Yen may decline as NZD/USD climbs into weekend
US Dollar Gains as New Zealand Dollar and British Pound Weaken
The US Dollar outperformed on Thursday, particularly against the New Zealand Dollar. Its strength accelerated during the early hours of the European trading session where the British Pound weakened alongside UK front-end government bond yields. Bank of England’s Governor Mark Carney spoke and said that policymakers are debating the merits of near-term stimulus.
This comes as UK Prime Minister Boris Johnson is determined to finish the trade negotiation phase of the Brexit process by year-end. EU Chief Negotiator Michel Barnier reiterated concerns over the possibility of agreeing on all aspects of a new partnership within this timeframe without an extension to the deadline. Sterling has generally been seeing selling pressure as this raises prospects of a no-deal withdrawal.
Another round of stimulus from a major central bank with possibilities of rate cuts would underpin the Greenback’s yield advantage, making it relatively more attractive. Sentiment continued improving in the aftermath of easing US-Iran tensions and ahead of the anticipated signing of a US-China “phase one” trade deal next week. The anti-risk Japanese Yen understandably underperformed.
Friday’s Asia Pacific Trading Session
A lack of major economic event risk during Friday’s Asia Pacific trading session places the focus for currencies on sentiment. To that end, S&P 500 futures are pointing cautiously higher after a rosy day on Wall Street. That may cushion some of the declines in the pro-risk New Zealand Dollar at the expense of JPY. ASEAN FX such as the Singapore Dollar have local retail sales to watch and Malaysian industrial output.
New Zealand Dollar Technical Analysis
Taking a look at the NZD/USD daily chart, prices now find themselves sitting on a near-term rising support line from November. This is as the currency pair remains above a falling trend line from March 2019 which signified a major reversal of trend. If these hold, we may see a push higher towards the 0.6664 – 0.6682 range. Though signals from trader positioning seem to hint otherwise.
| Change in | Longs | Shorts | OI |
| Daily | -6% | 13% | -1% |
| Weekly | 12% | -7% | 6% |
NZD/USD Daily Chart
Chart Created Using TradingView
--- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter
