By Dan Bell
The NZD/USD opens at 0.8240/0.8255 this morning as risk aversion weighs on global markets.
The NZD hit a 6 week high of 0.8318 on Friday afternoon before weaker Chinese GDP numbers bought the NZD down to earth.
Q1 GDP numbers from China were 8.1% versus expectations of 8.3%.
Global equity markets fell across the board on Friday night with the S&P 500 down 1.25% - commodities were similar with the CRB Index down 0.9%.
News that Spanish banks borrowed 316bn EUR from the ECB in March spooked the market and saw Spanish and Italian bond yields push up and the EUR under pressure.
China widened the USD-CNY daily trading band to +/-1.0% from +/-0.5%. The PoBC will continue to set the daily midpoint but a wider trading band is a move towards greater ‘flexibility’.
The NZD opens at 0.7940 AUD, 0.63 EUR, 0.5190 GBP, 66.60 JPY.
The big news on the local front this week will be NZ Q1 CPI numbers on Thursday. A weaker inflation number will reduce the odds of a rate hike from the RNBZ this year and potentially see the Kiwi under pressure.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
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