By Dan Bell
The NZD/USD opens at 0.8135 this morning, having briefly spiked to 0.8143 overnight, after minutes from the most recent US Federal Reserve meeting showed a willingness to deliver more monetary stimulus “fairly soon” unless the economy improves considerably. This caught the market by surprise.
The EUR/USD rallied to a fresh 7-week high after the Fed minutes, in essence, lowered the hurdle for a 3rd round of quantitative easing (QE3). This pulled the NZD/USD and other ‘risk assets’ sharply higher as the USD plunged. The USD weakened significantly when the US implimented QE round 1 & 2 as it effectively means more USD are printed.
The NZD/EUR hit a 1-month low of 0.6470 overnight.
US equity indices pared losses after the Fed minutes but were still modestly lower on the day, while the UK & European bourses were all down circa 1.5%.
The 19-commodity CRB Commodity Index climbed 0.1%. Oil prices rose 0.5%, while Gold surged above USD$1650 an ounce. Copper prices jumped 0.7% to a new 1-month high of USD$7648 a tonne, and were other base metals prices were higher.
The NZD opens at 0.8135 USD, 0.7750 AUD, 0.6500 EUR, 0.5125 GBP, & 63.90 JPY.
No NZ data on today’s calendar, while we get Manufacturing PMI & Trade Balance from China this afternoon, followed by EU & US Manufacturing PMI and US weekly unemployment claims and new homes sales, amongst others.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
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