By Dan Bell
The NZD/USD opens at 0.7960/0.7970 after trading in a narrow range between 0.7918 and 0.7987 overnight.
The EUR has recovered from 2 year lows against the USD and all time lows against the NZD and AUD but continues to look vulnerable. Spanish and Italian bond yields are up to ‘unsustainable’ levels again.
Stocks were generally down overnight following a weaker session in Asia. Inflation data from China came in weaker than expected which opens the door to further rate cuts from the Peoples Bank of China. Machinery Good Orders in Japan, a key measure of demand for Japan’s manufactured goods, dropped 14.8% in May.
Commodity prices are mostly higher overnight led by Oil prices which continue to be very volatile up 1.5% overnight.
The recent data from the world’s major economies continues to show a moderation in economic activity.
The NZD opens at current indicative levels against the major cross rates- 0.78 AUD, 0.6460 EUR, 0.5130 GBP, 63.40 JPY.
On the local front we get the Quarterly Survey of Business Opinion at 10am. From Australia we get NAB Business Confidence at 1:30pm. From China we get Trade Balance numbers this afternoon. We will also be watching for any developments from another EU Policy makers meeting.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
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