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The Opening Bell: Where currencies start for Monday, July 9, 2012

Currencies
The Opening Bell: Where currencies start for Monday, July 9, 2012

By Dan Bell

The NZD/USD opens at 0.7960/0.7980 this morning after trading to a low of 0.7942 following broad weakness in risk markets on Friday night.

The main event on Friday was the US Employment Situation Report which showed unemployment steady at 8.2% and jobs growth for the month of only 80K new jobs - less than the 90-100K expected but not weak enough to increase expectations of QE3.

There was also some concern about EU plans and if the ESM Bailout facility will be up and running as expected - apparently there are some technical and legal issues that need to be sorted.

Global stocks were weaker across the board. US equities were down 1%. Commodities were also down with the CRB Index -2.16% with Oil prices off 3.18%.

The EUR/USD is trading near 2 year lows around 1.2250. The AUD/USD has fallen over a cent from recent highs and opens around 1.0190.

The NZD opens at current indicative interbank mid rates- 0.7810 AUD, 0.5147 GBP, 0.6490 EUR, 63.40 JPY.

A weaker employment number from the US is further confirmation that the US economy continues to slow. Most of Europe is in a recession.

China’s growth is weaker than it has been for many years. With global economic growth remaining sluggish it is difficult to see ‘risk assets’ outperforming’ over the next few months - plus the potential for further risk aversion from the EU debt crisis -which should see the US Dollar outperform and leaves the NZD/USD exposed to more downside risk than upside potential at current levels.

Not much to report today. From Australia we get ANZ Jobs Ads. From China CPI and PPI this afternoon. 

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

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