Kiwi gains Over 3% Against Buck; We Have Gone Short @0.6450 (Midday Snapshot)


Any buying of USDs on Wednesday in the US session has yet to be seen on Thursday, with local traders content on trading with the USD negative momentum seen overnight and pushing the buck to fresh daily lows against some of the major currencies. While the Euro still remains confined to the previous daily range, Kiwi, Aussie and Sterling have all broken above Wednesday’s highs against the buck. Kiwi remains the clear outperformer, as yield differentials continue to favor the antipodean, which is higher by nearly 3% on the day. Meanwhile, Sterling/Yen, Aussie/Yen, Sterling/Swiss and Euro/Sterling have all traded to fresh yearly highs and lows respectively. Currencies also remain very well bid despite the latest downwardly revised 2009 frowth forecasts from the World Bank. Elsewhere, Ken Lewis has been testifying on the Bank of America merger and questionable actions at the time of the merger and throughout the crisis. This could weigh on sentiment as the testimony unfolds. On the data front, retail sales came in on the whole better than expected, while employment data was mixed with initial jobless claims better and continuing claims weaker. Meanwhile business inventories were slightly weaker. In Canada, capacity utilization disappointed after coming in lower than expected. Looking ahead, Fed Fisher is slated to speak at 15:00GMT, while Bank of Canada Carney is on the wires at 17:35GMT, followed by a press conference at 18:45GMT. All major US equity indices track higher by some 1%, while oil trades back above $72 and gold remains flat.


Nzd/Usd: The market is highly overextended intraday and with the pair up more than 3%, a short-term pullback is anticipated at a minimum over the near-term. Our overall bias is still bearish and we look for any additional gains to stall out well shy of the previous week’s 2009 highs by 0.6600. Look for additional rallies today to be well capped by 0.6500 with the psychological level also coinciding with the 78.6% fib retracement off of the 0.6600-0.6155 move. Position: SHORT @0.6450 FOR AN OPEN OBJECTIVE, STOP @0.6620.

Written by Joel Kruger, Technical Currency Strategist for
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