By Dan Bell
The NZD/USD rallied 1 cent this morning to make a high of 0.8146 after the US Federal Reserve FOMC announcement at 7am said they will not raise interest rates until at least late 2014 - much later than previously expected.
The NZD has settled back around 0.8110 as I write as we await the RBNZ announcement at 9am this morning.
All major currencies are stronger against the USD in response to the Fed statement. The EUR/USD strengthened from 1.2930 to over 1.31 while the AUD/USD hit a high of 1.0596.
Fed Chairman Ben Bernanke will be hosting a press conference this morning which should add further flavour to this morning’s statement.
Before the Fed announcement the market had been focused on the lack of progress on Greek debt discussions - which has not changed.
While the market expects EU officials and Private Bond Holders to reach an agreement soon, most people realise the EU debt crisis is far from over.
The focus on the local front will be the RBNZ announcement at 9am this morning. I can't see any reason why they should be upbeat about the NZ economy (or the Global economy for that matter) - so expect no change and a dovish statement. Australia is on holiday today.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
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