The NZDUSD opens lower at 0.8485 this morning.
The NZDUSD touched an 8-week low of 0.8464 overnight as the USD hit a 10-month high against a basket of currencies after data showed surprisingly strong US economic growth.
US GDP grew at a 4% annualized rate in Q2, much better than the 3% expected. In addition, Q1 GDP was revised higher to -2.1% from -2.9% previously stated. These figures point to a strengthening US economy and, at the margins, bolster expectations for US rate hikes in 2015 and for the prospects for the USD.
The US Federal Reserve had an interest rate policy decision this morning. The keys points were:
- Fed reduced bond purchases by USD$10 billion per month to USD$25 billion
- Labour market has improved, unemployment declining
- Household spending rising moderately, business investment advancing
- Recovery in housing remains slow
- Keep Fed Funds range unchanged at 0.0% to 0.25%
- States rates to stay in current range for “considerable time”
The NZDUSD bounced between 0.8464 and 0.8510 post the Fed decision.
There is no data on the domestic calendar today. Main focus is now on Friday nights US non-farm payroll employment numbers.
Global equity markets were mostly lower on the day – Dow -0.3%, Nikkei +0.2%, Shanghai -0.4%, FTSE-0.5%, DAX -0.6%
Gold prices fell 0.3% to USD$1295. Oil prices dropped -1.3%.
The current indicative mid-rates are:
NZDUSD 0.8485
NZDEUR 0.6335
NZDGBP 0.5015
NZDJPY 87.25
NZDAUD 0.9095
NZDCAD 0.9250
European inflation numbers and US manufacturing figures will be released 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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