By Dan Bell
The NZD/USD got slammed overnight, dropping over 100 points to trade sub 0.8100 for the first time since 25th January.
The NZD, Gold, and Base Metals all traded sharply lower after the US Federal Reserve upgraded its economic outlook overnight.
The financial markets have now re-priced in a very low probability of further US quantitative easing (ie QE3). The US treasury market also got smashed and yields have risen a huge amount across the curve.
The 19-commodity CRB Commodity Index fell 0.9% on the day. Gold prices dropped nearly 2% to USD$1637 per ounce - the lowest price seen since mid-January, and has fallen by USD$64 the past 2 days.
Copper and most Base Metals fell over 1% in price on USD strength and uncertainty on the outlook for demand from China. Similarly, Oil prices dropped by circa 0.5%.
Equity markets are little changed across the board overnight. The US S&P500 currently down 0.2%, while the Dow Jones Index is flat on the day.
The NZD opens at 0.8085 USD, 0.7740 AUD, 0.6205 EUR, 0.5155 GBP, & 67.65 JPY.
Business NZ Manufacturing Index will be released at 10.30am this morning. While, from Australia we will get the Inflation Expectations, New Motor Vehicle Sales, and the RBA Bulletin.
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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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