By Dan Bell

The NZD/USD opens higher at 0.8335 this morning, having hit a 10-week high of 0.8350 overnight.

The EUR/USD fell after Italy’s prime minister Mario Monti announced he would step down once the 2013 budget passes. This has unsettled the markets with Italian interest rate rising and equities falling sharply on fears are that the new PM will not be able to exercise the same level of fiscal control over the euro-zone 3rd largest economy.

Despite further euro-zone woes, the NZD remains well supported, aided in part by news that Fonterra has boosted payouts by an additional NZD$350mio, and Real Estate Institute figures which showed house prices increased by 1.4% in November. There will be no RBNZ rate cut anytime soon.

The US Federal Reserve is expected to unveil further economic stimulus in the form of new monthly bond purchases of USD$45 billion on Thursday. This is in addition to the previously announced USD$40 billion mortgaged-backed securities purchases.

World equity markets were moderately higher with the exception of the Euro Stoxx 50 index. The US Dow Jones was up 0.2% higher, while Shanghai index rose 1.1%.

Gold prices rose to 0.4% to USD$1712, and Copper prices gained 1.3% to almost 2-month highs of USD$8,140. Other metals prices were sharply higher as investors responded to rising factory output growth from China.

The NZD opens at 0.8335 USD, 0.7950 AUD, 0.6445 EUR, 0.5185 GBP, & 68.60 JPY.

There is nothing scheduled on the domestic calendar today. NAB Business Confidence hits the tapes at 1:30pm from Australia, while Euro group meeting, euro-zone economic sentiment, US Trade Balance and Wholesale Inventories are released tonight.

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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here