The NZDUSD opens higher at 0.8785 this morning.
Big news overnight was debt rating agency Fitch Rating revised its outlook on New Zealand's sovereign rating to 'positive' from 'stable'. Fitch mentioned fiscal consolidation is strengthening the resilience of NZ's credit profile; however they warned high external debt, commodity dependence, and exposures to China and Australia created vulnerabilities.
The NZD rallied strongly across the board in response to the Fitch news, with the NZDUSD touching 0.8800 - a 3-year high.
The USD weakened as US Treasury yields dropped for the second straight day. Safe haven buying of long-dated US Treasuries is seen as limited USD strength, at least for the time being, with some investors apprehensive that US equity markets are at record levels.
The Fed's Kocherlakota said that they should not raise interest rates until 1-2year outlook for inflation is 2%. He also mentioned the Fed is not too concerned about the low level of Q1 growth which was seen as negatively weather-impacted.
The GBP dipped after an unexpected fall in British factory and industrial output.
Half-time in the World Cup semi-final - Germany thrashing Brazil 5-nil!
Global equity markets were lower on the day - Dow -0.7%, Nikkei -0.4%, Shanghai +0.2%, FTSE -1.3%, DAX -1.4%
Gold prices ended the day flat at USD$1319. Oil prices fell 1.1%.
The current indicative mid-rates are:
NZDUSD 0.8785
NZDEUR 0.6450
NZDGBP 0.5125
NZDJPY 89.20
NZDAUD 0.9345
NZDCAD 0.9380
There is nothing scheduled on the domestic data calendar today.
Australian Consumer Sentiment & Chinese inflation figures hits the tapes early this afternoon.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here »
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