HiFX Morning Update, May 4 2018

The NZDUSD opens at 0.7043 (mid-rate) this morning.

The Kiwi is the best performer of the G10 currencies as the USD lost ground after yesterday morning’s Fed announcement underwhelmed the market.

The NZDUSD has traded a 106 point or 1.50% range this week falling from Monday’s high of 0.7089 to a 0.6983 low on Wednesday. Thursday’s bullish, overbearing daily candle combined with a close back above 0.7000 suggests a retracement higher is likely on a correctional basis to 0.7150. This is underpinned by the Relative Strength Index retracing from a low of 26 to be at 35 (back above the 30 oversold indicator) and moving higher. The 200 moving day average is at 0.7166.

In the week ending April 28, the advance figure for seasonally adjusted U.S. Initial Claims was 211,000, an increase of 2,000 from the previous week's unrevised level of 209,000. The 4-week moving average was 221,500, a decrease of 7,750 from the previous week. This is the lowest level for this average since March 3, 1973 when it was 221,250.

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced overnight that the goods and services deficit was $49.0 billion in March, down $8.8 billion from $57.7 billion in February, revised. March exports were $208.5 billion, $4.2 billion more than February exports. March imports were $257.5 billion, $4.6 billion less than February imports. Year-to-date, the goods and services deficit increased $25.5 billion, or 18.5%

Canada's merchandise trade deficit with the world widened from $2.9 billion in February to a record $4.1 billion in March. Canada's imports rose 6.0% to a record $51.7 billion in March. Exports also increased, up 3.7% to $47.6 billion.

Economic activity in the U.S. Non-Manufacturing sector grew in April for the 99th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business. NMI® registered 56.8%, down 2% from March.

The U.S. Non-Manufacturing Business Activity Index decreased to 59.1% down from 60.6% in March reflecting growth for the 105th consecutive month. New Orders Index at 60% from 56.6% in March. Employment Index at 53.6% from 56.6% in March. The respondents have expressed concern regarding the uncertainty about tariffs and the effect on the cost of goods. Overall, the respondents remain positive about business conditions and the economy.

Overnight data tonight includes U.S. Unemployment rate, U.S. Non-Farm Employment Change, U.S. Average Hourly Earnings and four FOMC Members speaking. Euro area PMI and Retail Sales; and German, French, Italian and Spanish PMI.

Global equity markets are mainly lower: Dow +0.05%, S&P 500 -0.18%, FTSE -0.54%, DAX -0.88%, CAC -0.50%, Nikkei closed, Shanghai +0.64%.

Gold prices are modestly higher 0.1%, trading at $1,313 an ounce. WTI Crude Oil prices are up another 1.0% overnight currently trading at $68.48 a barrel.

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