By Dan Bell
The NZD/USD opens at 0.8345 this morning after trading in tight 0.8330 to 0.8369 range overnight.
EUR/USD hit a 2-month high of 1.3320 after it has been reported that Greek leaders finally managed to secure the EUR 130 billion bailout deal after agreeing to further fiscal austerity measures, thereby avoiding a chaotic debt default and preventing further contagion to larger euro zone economies like Italy, Spain, and Portugal.
However, German Finance Minister Wolfgang Schaeuble has since stated the conditions for a final agreement on the bailout package was “not there yet”, plus Greek still has the very serious issue of implementing the austerity measures which will be not be warmly received by the Greek populace. Greece has a major bond redemption due on 20th March and would be forced to default on this obligation without the bailout funding.
The 19-commodity CRB Commodity Index was close to flat on the day. Gold prices did spike 1% higher to USD$1751, before settling back to USD$1726. Copper prices hit USD$8738 per ton - a 5-month high - on the Greek bailout news, and Oil prices gained circa 1%.
Equity markets were marginally firmer across the board overnight. The US S&P500 currently up 0.4%, while the Dow Jones Index was 0.2% stronger.
Chinese CPI data came in stronger than expected yesterday – this caused the NZD to dip, albeit temporarily. The European Central Bank and Bank of England both keep interest rates at 1.0% and 0.50% respectively, although the BoE did announce another GBP50 billion of quantitative easing (ie they will purchase GBP50bio of mostly government bonds with freshly printed money).
The NZD opens at 0.8345 USD, 0.7730 AUD, 0.6275 EUR, 0.5270 GBP and 64.80 JPY.
There is no domestic data scheduled for release today, although the Reserve Bank of Australia Monetary Policy Statement will be issued at 1.30pm – this is will closely watched, particularly give they surprised the markets by not cutting interest rates on Tuesday.
In other news and a sign of the times (or should that be an end of an era?), Kodak, the inventor of the hand-held camera, plans to stop making cameras to cut costs.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
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