By Dan Bell
The NZD/USD opens around 0.7970 after trading off lows around 0.7927 and highs of 0.7987.
Once again bad news from the US has supported the Kiwi and other risk assets overnight!?
US Retail Sales were weaker than expected at -0.5% for June compared to expectations of a +0.2%. As a result market participants are pricing in greater chances of further easing measures from the Federal Reserve which has the US Dollar under pressure against most major currencies. The Fed Chairman is speaking at his semi annual testimony to congress tomorrow.
Germany's Constitutional Court said on Monday it would not rule until September on whether the euro zone's bailout fund -The European Stability Mechanism - and planned changes to the region's budget rules are compatible with German law.
Despite this very negative news the EUR has held up against the USD trading to a high of 1.2290. The court held a public hearing on July 10 into complaints from academics and lawmakers from Chancellor Angela Merkel's own coalition that the European Stability Mechanism (ESM) and fiscal pact violated German law by taking away responsibility for the budget from parliament.
US stocks finished down for the day with the S&P 500 off 0.23%. Commodities managed to rally with the CRB Index up 0.69% led by Oil prices up 1.37%.
The NZD opens at current indicative interbank levels against the major cross rates - 0.7770 AUD, 0.6490 EUR, 62.80 JPY, 0.5110 GBP.
From New Zealand today we get Q2 CPI at 10:45- (exp. 0.5%, prev. 0.5%). Probably not going to have a huge impact on the NZD to be honest unless the result is significantly different to expectations.
From Australia we RBA Monetary Policy Meeting Minutes at 1:30pm. Tonight we get UK CPI, German Economic Sentiment, US CPI and the first day of Ben Bernanke’s testimony to congress tonight.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
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