HiFX's Dan Bell reviews the week's global currencies action, including market disappointment over the European summit and a lack of major ECB action

HiFX's Dan Bell reviews the week's global currencies action, including market disappointment over the European summit and a lack of major ECB action

Bernard Hickey talks with HiFX Senior Dealer Dan Bell about the week's currencies and markets action in their 'Never a Dull Moment' report, including news this week that investors are disappointed at the failure of last week's summit to solve the European debt crisis.

Investors are also worried about a continued lack of action by the European Central Bank to intervene to support bond prices and keep interest rates down, he said.

"There seems to be no other solution to this debt crisis. The way things are going in Europe it looks like things will get worse before they get better, which relies on the ECB participating more heavily in the bond market, which they continue to say they're not going to do," Bell said, adding he saw the risk of continued risk aversion and falls in riskier currencies, including the New Zealand dollar.

Bell talked about the stresses inside the European banking system, which is forcing banks to rely on the ECB as a lender of last resort.

"The pressure on the credit market in Europe is making matters worse and it's all happening under the radar," he said.

European banksalso faced calls to raise fresh capital from shareholders, which was difficult amid a climate of falling markets and credit market downgrades, he said. Even governments would struggle to help raise capital for banks given their own parlous fiscal positions.

Bell pointed to the euro's fall through US$1.30 this week to an 11 month low as crucial. He saw options barriers around US$1.29, meaning any break through that level could take it down to US$1.20.

Back when the Euro fell to a low of US$1.18 in August 2010, the New Zealand dollar was trading at 65 USc.

"That correlation between the euro vs the US dollar and what's happening in the Kiwi vs the US dollar is quite close. It's running at an 80% correlation at the moment."

The New Zealand dollar was a range from 74 USc to 78 USc, although overall Bell saw a downtrend in place. He noted however that markets were extra volatile during the less liquid Christmas/New Year period.

"It wouldn't surprise me to a see a 5-10% range in the New Zealand dollar in the next two to four weeks."

Dan Bell is the Senior Dealer at HiFX, a UK-headquartered foreign exchange dealer with significant operations in Australia and New Zealand. It has a dealing room in Auckland. See more detail here.

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4 Comments

oh bugger it... I'm going to paste this here...

Happy Kwanza everyone -

 

Politically Correct Holiday Party

Subject: The Office Party FROM: Pat Lewis, Human Resources Director TO: Everyone RE: Christmas Party DATE: December 1

I'm happy to inform you that the company Christmas Party will take place on December 23, starting at noon in the banquet room at Luigi's Open Pit Barbecue. No-host bar, but plenty of eggnog! We'll have a small band playing traditional carols...feel free to sing along. And don't Be surprised if our CEO shows up dressed as Santa Claus!

 

FROM: Pat Lewis, Human Resources Director DATE: December 2 RE: Christmas Party

In no way was yesterday's memo intended to exclude our Jewish employees. We recognize that Hanukkah is an important holiday which often coincides with Christmas, though unfortunately not this year. However, from now on we're calling it our "Holiday Party." The same policy applies to employees who are celebrating Kwanzaa at this time. Happy now?

 

FROM: Pat Lewis, Human Resources Director DATE: December 3 RE: Holiday Party

Regarding the note I received from a member of Alcoholics Anonymous requesting a non-drinking table ... you didn't sign your name. I'm happy to accommodate this request, but if I put a sign on a table that reads "AA Only" you wouldn't be anonymous anymore. How am I supposed to handle this? Somebody?

 

FROM: Pat Lewis, Human Resources Director DATE: December 7 RE: Holiday Party

What a diverse company we are! I had no idea that December 2 begins the Muslim holy month of Ramadan, which forbids eating, drinking and sex during daylight hours. There goes the party! Seriously, we can appreciate how a luncheon this time of year does not accommodate our Muslim employees' beliefs. Perhaps Luigi's can hold off on serving your meal until the end of the party - the days are so short this time of year - or else package everything for take-home in little foil swans. Will that work? Meanwhile, I've arranged for members of Overeaters Anonymous to sit farthest from the dessert buffet and pregnant women will get the table closest to the restrooms. Did I miss anything?

 

FROM: Pat Lewis, Human Resources Director DATE: December 8 RE: Holiday Party

So December 22 marks the Winter Solstice...what do you expect me to do, a tap-dance on your heads? Fire regulations at Luigi's prohibit the burning of sage by our "earth-based Goddess-worshipping" employees, but we'll try to accommodate your shamanic drumming circle during the band's breaks. Okay???

 

FROM: Pat Lewis, Human Resources Director Date: December 9 RE: Holiday Party

People, people, nothing sinister was intended by having our CEO dress up like Santa Claus! Even if the anagram of "Santa" does happen to be "Satan," there is no evil connotation to our own "little man in a red suit." It's a tradition, folks, like sugar shock at Halloween or family feuds over the Thanksgiving turkey or broken hearts on Valentine's Day. Could we lighten up?

 

FROM: Pat Lewis, Human Resources Director DATE: December 10 RE: Holiday Party

Vegetarians!?!?!? I've had it with you people!!! We're going to keep this party at Luigi's Open Pit Barbecue whether you like it or not, so you can sit quietly at the table furthest from the "grill of death," as you so quaintly put it, and you'll get your freaking salad bar, including hydroponic tomatoes. But you know, they have feelings too. Tomatoes scream when you slice them. I've heard them scream. I'm hearing them scream right now!

 

FROM: Teri Bishops, Acting Human Resources Director DATE: December 14 RE: Pat Lewis and Holiday Party

I'm sure I speak for all of us in wishing Pat Lewis a speedy recovery from her stress-related illness and I'll continue to forward Your cards to her at the sanatorium.

In the meantime, management has decided to cancel our Holiday Party and give everyone the afternoon of the 23rd off with full pay.

We hope that this change does not offend anyone.  

All this violence in the fx market...John's old mates will be loving it..pigs in sh__.

Must be close to time to bring the loot back from across the ditch...oh look another fat gain...how wonderful....xmas fx....

Yes it is hard to believe but there are some who don't know about the piigs farce and the death of the euro or the massive risk in the banks in europe and the us and uk....hell there are even people who still believe China is on a growth road to ever greater things with no problems....now that's a cracka.

This xmas and new years we can play the new game....pick the bank to have the first RUN..isn't it fun....so many to chose from...so much excessive leaverage....so many fat bloated bankers rushing to buy gold. Reminds me of those curly xmas table things you blow into..weeeeee...weeeeee..

 

Listen...can you hear OllyN laughing his socks off....?

 " It sees no need to change the tax regime, arguing housing is less tax-privileged than it is often made out to be." herald

leaving to one side this BS about capital gains and property trading...we have the matter of govt policy making housing less affordable....yes we do....the gst damage is all too evident to average Kiwi even if Bill English and Key and the rest of the bloated Cabinet fail to recognise it.

The straw that broke the building sector is the gst theft...new house and you are down at least $25,000 in tax to those in wgtn who are wont to waste it. Of the few who still borrow to build..they are borrowing to pay the thieving tax....go figure....

What would be the flunky body language round the excessively extended Cabinet table of leeches, if the most junior flunky raised the issue of gst damaging building sector activity and thereby govt revenue?....it just will not happen...because they lack the guts to raise more than a finger in agreement with the lords at the table...

But if one of the lords like Tubby raised the same issue...oh hell that's a different matter entirely isn't it...Tubby spoke so it must be ok...and if Wild bill with the ECHO grunted in support then it's flunky agree quickly time....

---------------------------------------------------------------------------------------------------------------------

A break in the thought line now....I mentioned those in wgtn who are wont to waste the gst theft...waste it where you ask?....why on subsidising the landlords of course...what better benefit can you think of...one that ensures the bubble level prices of the older renter properties remain bloated and beyond the reach of low income Kiwi families...and the banks just love it...they are creating the credit to bloat the bubble knowing the landlords will chase the subsidy...fabulous rort....got to be the greatest stench in govt policy...

Raise that at the Cabinet table of leeches and it will quickly end the morning tea and cream cake hour. Tubby will not be pleased.

No Bill it's not Tinnitus....that's an echo between your ears...it's caused by a failure to think....like when you dreamed up a way to cut paye, win votes and raise gst?....oh sorry....look try sticking a finger in one earhole...grey cells working now are they?....good....your gst hike killed off the building sector activity...yes it bleeding did and stop arguing.....just go tell the FX jocKEY he needs to select reverse and plant boot....and stop with the BS about chch saving the economy....it aint going to happen.

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