By Dan Bell
The NZD/USD had a relatively quiet weekend, having dipped below 0.7650 during Friday afternoon before bouncing back to 0.7745 which is where we currently sit.
Main news over the weekend was that 26 of the 27 EU leaders agreed to pursue tighter integration with stricter budget rules in the euro area in an attempt to allay fears about the region's debt crisis. However, these changes are not an immediate panacea to the EU's ills.
In other news:
US consumer sentiment hit a 6-month high, and
Reports that the Bank of China (China's central bank) plans a new investment vehicle to manage USD$300 billion to improve returns on it enormous foreign exchange reserves. One fund will focus on the US, while another on Europe.
Stock markets were buoyed by the EU leaders agreement, with US indices up 1.6% on the day.
Gold prices rose 0.3% on Friday to close at USD$1711 an ounce, while Copper and Nickel both climbed 1.6% higher. Oil prices also closed firmed in choppy trading.
It is a light week data-wise domestically with NZ Food Price Index scheduled on Tuesday and Business Manufacturing Index on Thursday. We still expect news and events from Europe to continue to be the influence on the currency markets.
The indicative NZD levels are: 0.7745 USD, 0.7595 AUD, 0.5790 EUR, 0.4950 GBP, and 6020 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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