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The Opening Bell: Where currencies start on Monday, November 7, 2011

The Opening Bell: Where currencies start on Monday, November 7, 2011

By Dan Bell


Greece is currently scrambling to hammer out a deal to  form a new unity government to enact the EU bailout agreement.  Prime Minister Papandreou has said he did not want to lead the new government.

Once the Greek situation is somewhat resolved, Italy, with its EUR 1.8 trillion in debt, is may move into centre stage of the EU debt crisis. Italy is the 3rd largest debtor nation on the globe, so things could potential get rather unpleasant rather quickly barring some inspired leadership and decision making from the EU, ECB, and IMF.

US non-farm payroll employment numbers were released on Friday. They came in mixed with the number of jobs created being only 80,000 (97,000 was expected), but the unemployment rate dropped by 0.1% to 9.0%. The US needs to create 200,000 jobs per month to absorb the ever expanding labour force - hence, things are far from rosy here.

Currency markets are nervous and illiquid this morning. Prices are wide as we await the news on the new Greek unity government. The NZDUSD is currently quoted 0.7930-0.7960.

Global stock markets closed lower on Friday. The Dow Jones was 0.5% lower, S&P lost 0.6%, FTSE was down 0.3%, and the Germany DAX lost a chucky 2.7%!  

Commodities were mixed with oil prices over 1.0% higher, while gold and silver prices fell 0.5% and 1.2% respectively, and copper prices dropped 0.7%. The CRB index managed to close 0.13% higher.  

The domestic data calendar is lacklustre this week. The RBNZ Financial Stability Report and Business Manufacturing Index are scheduled for Wednesday, while the REINZ House Price Index and Food Price Index will both hit the tapes Friday. Once again, offshore data and events will dictate direction for the NZD.

The  NZD opens at the following levels: 0.7930-0.7960 USD, 0.7640-0.7675 AUD, 0.5750-0.5780 EUR, 0.4945-0.4975 GBP, and 61.95-62.30 JPY.


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

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