From a low of 0.6883 yesterday morning, the NZD is now nudging up against 0.7000 USD; EUR is around 1% higher against the USD at 1.1650

By Nick Smyth

In FX, the EUR is around 1% higher against the USD at 1.1650, reversing yesterday’s losses.  The EUR tracked sideways through most of the NZ trading session around 1.1540, despite other markets showing signs of recovering risk appetite.  But as London came in and Italian bonds opened strongly, the EUR moved steadily higher through the European morning before getting a final boost later in the session after reports that the Five Star party had called on Eurosceptic economist Savona to withdraw his candidacy for finance minister. 

The NZD is the second best performing currency over the past 24 hours against a backdrop of euro strength and improved risk appetite.  From a low of 0.6883 yesterday morning, the NZD is now nudging up against 0.70 (it currently sits at 0.6987, its highest level in three weeks).  The RBNZ FSR had little market impact on the NZD or NZ rates, with little read-across to the monetary policy outlook.  The NZD has also outrperformed on all the crosses, with NZD/EUR near 0.60, a four month high and NZD/GBP pushing up to 0.5260.  In the day ahead, the ANZ Business Survey will be the key local focus. 

Offshore, the focus will remain on Italy, although if market conditions remain reasonably stable the Eurozone core CPI release will be closely watched. 

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