By Dan Bell
With the US on holiday overnight the focus was on Europe where sovereign debt concerns and a slowing global economy continue to weigh on investor sentiment putting stock markets under significant pressure with the UK FTSE closing down 3.6% and the German DAX off 5.3%.
The NZD/USD followed the risk aversion trend dropping to a low just under 0.8300 as the USD benefited from broad safe haven demand. We open this morning around 0.8310/0.8330.
Weak purchasing managers indexes (PMIs) from the Euro zone, China, India and Britain showed world factory output slowed in August adding to the recent bout of weaker economic data.
The AUD/USD and EUR/USD were under pressure with the AUD trading to lows around 1.05 and the EUR dropping under 1.41 to hit a 1 month low.
Commodity prices were generally weaker as lower global growth expectations continue to weigh.
The NZD was one of the worse performing currencies overnight and is weaker against most major cross rates this morning around 0.7890 AUD, 0.5900 EUR, 0.5165 GBP and 63.95 JPY.
There is no local data to mention today but in Australia we get Home Loans, and Current Account numbers at 1:30 NZT followed by the RBA rate announcement at 4:30 NZT. While no change is expected (4.75%) the statement will be closely watched for further clues.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
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