By Dan Bell
The NZD/USD opens higher at 0.8100 this morning supported by strong soft commodity prices, and increasingly strong views that Spain will soon request a bailout.
It was reported (unofficially) that Spain will request a bailout that will allow the European Central Bank to purchase the nation’s debt to drive interest costs lower.
It is speculated this will occur next month at a meeting of finance ministers and central bankers. Spain's borrowing costs have already dropped to 1-month lows in response.
US new jobless claims rose slightly on the week, but the trend reading fell close to a 4-year low, indicating the labour markets is still gradually improving.
US Govt bond market interest rates (yields) are rising as expectations of a further round of stimulus (ie quantitative easing) diminish. Higher yields have made the USD more attractive to investors.
Global equity markets closed higher overnight. US S&P500 & Dow Jones indices both rose 0.70%, while the European & UK bourses climbed by similar magnitudes.
The 19-commodity CRB Commodity Index was rose 0.25%. Oil prices rose 0.4%, while Gold firmed 0.9% to USD$1614 per ounce. Copper prices gained 1% to USD$7449 a tonne, and were other base metals prices were generally higher.
The NZD opens at 0.8100 USD, 0.7705 AUD, 0.6555 EUR, 0.5145 GBP, & 64.30 JPY.
NZ Producer Price Index figures is released at 10.45am today. Tonight brings euro-zone Trade Balance, and Consumer Sentiment & Inflation Expectations from the US.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
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