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The Opening Bell: Where currencies start for Thursday, April 24, 2014

Currencies
The Opening Bell: Where currencies start for Thursday, April 24, 2014

By Dan Bell

The NZDUSD opens at 0.8580 this morning.

It?s all about the Reserve Bank of NZ expected interest rate hike and accompanying statement today. 

They will raise the official cash rate (OCR) by 0.25% to 3.00%; however major focus will be on the accompanying statement.

If the RB implies the market has been too aggressive in pricing future rate hikes or mentions the NZD trade-weighed index is too high, then the NZD is likely to fall. If not, then the NZD can nudge back higher once again.

Global milk powder prices have dropped sharply in recent weeks, and the heat seems to have come out of the property market, so it will be interesting to see how the RB interprets these events.

From yesterday, Australia Q1 inflation came in notably lower than expected. The AUDUSD dropped sharply in response. This move was reinforced when China' HSBC Manufacturing PMI data, released shortly after the CPI numbers, was also somewhat weak. The NZDAUD rallied from sub 0.92 to breach 0.9250.

US manufacturing data was a bit weaker than expected but still indicated expansion, while sales of single family homes disappointed.

Global equity markets were mostly lower on the day - Dow -.01%, Nikkei +1.1%, Shanghai -0.1%, FTSE -0.1%, DAX -0.6%

Gold prices are steady USD$1284. Oil prices dipped 0.1%.

The current indicative mid-rates are:

NZDUSD           0.8585
NZDEUR           0.6205
NZDGBP           0.5110
NZDJPY            87.90
NZDAUD           0.9235
NZDCAD           0.9465

The RBNZ OCR decision will be released at 9:00am.

The European Central Bank head speaks tonight, and US durable goods and weekly unemployment claims hit the tapes tonight.

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

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