AUD & NZD - large underperformers in the overnight session with no real catalyst as risk performed ok. Iron ore remains soft, which could explain AUD, but NZD offered tone that went through recent support at 0.6980 saw further momentum and several clients looking for a catalyst, actually flow seen in NZD was demand we are told. Dealers did see RM demand for EURAUD; which may have been the answer to the weakness, as EUR and GBP vs Commodity currencies continued to move higher.
Commodity currencies generally remain under some pressure with regard to Trump trade warnings and a higher Dollar. . NZDUSD has breached its uptrend from its January 2016 low and many expect other low yielding commodity currencies to follow suit. The oil market is trying to find a balance between rising North American oil production and OPEC reducing its supply increase via self-restrictions. What happens here is a terms of trade shift in favour of North America. OPEC's highly compliant supply cut keeps oil prices up increasing the pace of the supply shift towards the US and Canada. Rising oil rigs and increasing funding flows into the US shale oil complex are proof of this development. Today’s US government data could see oil inventories rising again following yesterday’s API's data showing a 900,000-barrel rise in U.S. crude inventories and big 4.4-million-barrel increase in gasoline supplies.