The Opening Bell: Where currencies start on Friday, September 9, 2011

The Opening Bell: Where currencies start on Friday, September 9, 2011

By Dan Bell

 NZDUSD traded in a moderate range overnight, rallying to the high 83’s before dropping back from whence it came. It is currently trading just above .8300.

It has been an interesting 24 hours in the global financial markets, with the notable news and events being:

- Australian employment numbers disappointed with unemployment rate 0.2% higher to 5.1%.  NZDAUD jumped higher in response.

- EURUSD fell to 2-month lows after the European Central Bank (ECB) signaled a pause to its interest-rate tightening cycle that began just 5-months ago. The ECB stated the euro-zone economy was subject to “intensified downside risks.” The NZDUSD held up well, and the NZDEUR touched 0.6000 – a level last seen early August.

- US Federal Reserve Chairman Ben Bernanke stated the Fed will do all it can to boost the economy but gave no specifics. He downplayed concerns about inflation and this helped to raise hope of another round of stimulus (i.e. effectively printing money to buy US Treasury bonds in the secondary market).

- At 11am NZ time, President Obama is expected to lay out an USD$300 billion jobs package – a plan he hopes will be the magic bullet for the struggling US economy.

In other news:

- Global equity markets were mixed. UK & European indices were circa 0.4% higher, while the US indices were down circa 1.0% on the day.

- Gold prices rallied 2.6% to USD$1,865/oz

- Oil prices fell 1.0%, while the copper and nickel prices rallied 2.0% and 1.3% respectively.

Greece continues to be a major issue for the euro-zone. Its failure to meet its fiscal targets is causing increasing anger in Germany and Netherlands, with Greek exit from the Euro a possibility. This situation will be on going and should weigh on the EURUSD going forward – this may restrain the NZDUSD as well.

No economic data out of NZ today, but there Japanese GDP and Chinese CPI, Industrial Production, Retail Sales (amongst other) to keep the market interested.

However, Big new today is the start of the 2011 Rugby World Cup – go the All Blacks !

NZD rates this morning sit around 0.8310 USD, 0.7855 AUD, 0.5200 GBP, 0.5980 EUR, 64.35 JPY.

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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here

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