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The Opening Bell: Where currencies start for Wednesday, March 7, 2012

Currencies
The Opening Bell: Where currencies start for Wednesday, March 7, 2012

By Dan Bell

The NZD/USD opens around 0.8120 this morning after another negative night for global markets.

The NZD was under pressure through yesterday’s session and continued to decline overnight.Support is initially seen around 0.81 while 0.82 will provide resistance in the short term.

There continues to be significant anxiety about the Greek PSI with rumours that participation in the bond swap will not reach the official target by this week’s deadline (Thursday night)

Global equities are down with US markets currently off 1.7% with another hour or so before they close. The CRB Index is down 1.37%, led by oil prices down 1.4% and copper off 3%.

The USD and JPY are stronger against most major currencies as ‘safe haven’ currencies outperform overnight.

The AUD/USD came under selling pressure yesterday afternoon after the RBA rate announcement where they left rates on hold but comments were more downbeat than expected - suggesting greater chance of a rate cut this year and certainly no reason for a rate hike in the near future.

The NZD has been one of the worst performing currencies this week. Against the major cross rates we open at current indicative levels: 0.77 AUD, 0.618 EUR, 0.516 GBP, 65.5 JPY.

Fonterra dairy auction this morning has seen average prices down 0.9% - the third consecutive decline. The index has fallen approx 25% since hitting a four year peak last March.

Not much to report on the local front. From Australia we get Q4 GDP at 1:30 NZT.

Offshore the focus will be on the Greek farce and US ADP Employment Numbers which are a precursor to official Employment Data released on Friday.

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

(Updated with Dow close)

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