By Dan Bell
The NZD/USD opens at 0.8105 this morning, having touched 0.8143 overnight, after the EUR/USD traded to a 7-week high on speculation the European Central Bank (ECB) will take action to lower Spanish and Italian borrowing costs.
It has been leaked that the ECB are investigating plans to effectively cap Spanish and Italian yields. This does not mean they will intervene, it does move the ECB ever closer to that point.
The ECB holds it next policy meeting on 6th September and the EU finance ministers meet 14 & 15 September, which will be a crucial period for the euro & euro-zone.
The Greek PM meets with the French President and German Chancellor on Friday, with the Greeks expected to ask for a 2-year extension of austerity to soften their impact. Any concession granted will be minimal.
The AUD/USD rallied yesterday, taking the NZD/USD with it, after the RBA released its monetary policy minutes which cask domestic growth in a positive light.
Credit rating agency S&P warned overnight that the chance of another US recession has increased.
Global equity markets were mixed. US equity indices initially hit a 4-year high before closing lower (Dow Jones -0.51%, & S&P500 -0.34%). The main European markets were 0.5 to 1.0% higher on the day.
The 19-commodity CRB Commodity Index climbed 0.9%. Oil prices rose 0.6%, while Gold jumped 1.0% to USD$1637 per ounce. Copper prices surged 2.0% to a 1-month high of USD$7632 a tonne, and other base metals prices were markedly higher.
The NZD opens at 0.8105 USD, 0.7735 AUD, 0.6500 EUR, 0.5135 GBP, & 64.25 JPY.
No NZ data on today’s calendar, while the MI Leading Index will be released from Australia.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
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