HiFX Morning Update, March 6 2017

HiFX Morning Update, March 6 2017

The NZDUSD opens at 0.7032 (mid-rate) this morning.

The NZD remains under pressure against all its rivals, and was one of only a few currencies not to claw back some of its fall against the USD late on Friday.

The USD lost ground against all its major rivals with investors taking profit after shorting the USD earlier in the week on the back of expectations that Fed Chair Janet Yellen would indicate that the Fed are likely hike rates at their March meeting next week. Yellen didn’t disappoint and during her address to the Executives' Club of Chicago she stated that the Federal Reserve is likely to raise interest rates in March barring any unpleasant surprises. “At our meeting later this month, the Federal Open Market Committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate,". A 25 basis point hike is now all but priced in for next week’s meeting.

The UK service sector growth fell further that expected in February with the index falling to 53.3 from 54.5 in January, economists had expected the index to edge down to 54.2. Economists had been expecting sales to increase by 0.3%.

Euro-zone retail sales unexpectedly fell in January with the report showing a 0.1% m/m fall after a 0.5% fall in December.

The domestic highlight for the NZD this week will be Tuesday night’s GDT auction with the futures pointing to another fall in dairy prices circa 7%.

Global equity markets closed out the week mixed- Dow +0.01%, S&P 500 +0.05%, FTSE -0.11%, DAX -0.27%, CAC +0.63%, Nikkei -0.49%, Shanghai -0.36%.

Gold prices fell 2.5% over the course of the week closing on Friday at $1,234 an ounce, WTI Crude Oil lost 1.2% over the course of the week closing on Friday at $53.33 a barrel.

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