By Dan Bell
The NZD/USD made a clean break through resistance at 0.8500 and made a new post float high of 0.8572 overnight.
We are also making new highs against the Pound over 0.5300 and the Euro over 0.6050. Against the AUD we briefly touched an interbank high just over 0.8000 and JPY we open around 67.60.
The NZD on a trade weighted basis (TWI) is sitting just under 74.00. The surge in the Kiwi will have the Reserve Bank concerned particularly given the recent uptick in inflation. The RBNZ have a FX intervention policy that would allow them to influence the level of the exchange rate which they rarely use. The last time they intervened the NZD TWI was over 77.00 in 2007.
Global markets have had a very positive night with equities up across Europe (DAX +1.19%, FTSE +0.65%) and the US (Dow +1.65%) on encouraging remarks from U.S. President Barack Obama that some progress was made toward a budget-reduction deal and better than expected corproate earnings.
Commodities have also pushed higher with the CRB Index up 0.80% led by oil prices which are up over 1%.
Under growing pressure to avert a government default, U.S. President Obama threw his support on Tuesday behind efforts by a bipartisan group of senators to negotiate a new deficit-reduction
The Bank of Canada left their rates on hold at 1%. The RBA minutes yesterday were pretty much neutral.
The AUD/USD has bounced off recent lows and opens this morning back over 1.07 while the EUR/USD has been as high as 1.42 after trading close to 1.40 yesterday.
The big focus for the rest of the week is the EU summit on Thursday night.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
2 Comments
Updated 41 minutes ago
Dairy prices have fallen for the third consecutive time in Fonterra's fortnightly online global auction.
The dairy cooperative's global dairy trade index fell 5.1% on Wednesday to an average selling price of $US3796 a metric tonne.
At the previous auction two weeks ago, the index was 6.7% down.
Prices have fallen about 20% since March.
Analysts say dairy prices have passed their peak, but still remain fairly robust.
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I think prices are back %35 in NZ$'s in the last 3 months, nothing happening here, move along.
Skim milk powder fell 5.2 per cent to US$3,488 a tonne and whole milk powder dropped 4 per cent to US$3,475 a tonne. Anhydrous milk fat fell by an average 12.5 per cent to US$4,614 a tonne, milk protein concentrate dropped 10.2 per cent to US$5,525 a tonne and rennet casein fell 1.4 per cent to US$9,992 a tonne
The problem is that the low US$ is encouraging the States to export. Last year from memory they exported 100 million pounds of SMP this year over 180 million pounds.
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