By Dan Bell
The NZD/USD opens around 0.8140 this morning as risk aversion weighs on global markets.
Global stock markets were down across the board with the European bourses off over 2% (DAX -2.84%, FTSEW -2.3%) and the US down 1% (S&P 500 -0.9%).
Commodities have been hit hard with the CRB Index down 1.86% - led by Silver-6.18%, Gold -3.12%, Copper -3.15% and Oil prices down 1.93%.
Sentiment turned negative after the FOMC minutes yesterday reduced the odds of another round of Quantitative Easing from the US Central Bank and concerns about Spanish sovereign yields.
It would seem the liquidity fuelled rally in the first quarter was due a correction - which is what we are seeing. So despite the fact the world isn’t falling off a cliff, the market is trimming back on ‘risk’ assets and the NZD as ‘pro-risk’ currency has been under pressure.
ADP Employment numbers from the US came in as expected and previous months were revised up which continues to support a strong Non Farm Payrolls number on Friday night.
The NZD opens at current indicative levels against the major cross rates- 0.7930 AUD, 0.6190 EU0.5120 GBP, 67.00 JPY.
Nothing to report on the local front today. Offshore we get the Bank of England tonight and on Friday the US Employment Situation Report will be the focus.
Enjoy the long weekend.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
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