FX Morning Colour

NZD: A fresh setback for the currency to print fresh 5-month lows at 0.6927. This came as NZ PM-elect Ardern unveiled government plans to review and reform the RBNZ’s Central Bank Act to possibly include employment, alongside inflation as a dual mandate. As it stands, unemployment is near decade lows, while jobs growth however, is at a 2-year low (figures for Q3 released at 2245BST). Although, given that the central bank does not exclude labour market data, its arguable whether a dual mandate will significantly alter the monetary policy skew. What has been brought into question however, is the autonomy of the RBNZ.

AUDNZD further supported by the soft NZD, with the cross moving to its highest level since Apr’16. Near term resistance resides at 1.13, which could curb gains a see the cross top out, while the 2016 high is situated 1.1333.

JPY: The bid in USD/JPY has been revived by the 16 consecutive days of gains for the Nikkei. Although, the upside could potentially top out just north of 114, with the highs seen in May and July at 114.38-49 within sight. Additionally, the price action may well be dictated by US yields as the 10yr approaches the key 2.4% yet again (currently 2.38%).

24 Oct 2017 - 08:26- Research Sheet- Source: RANsquawk

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