By Dan Bell
The NZD/USD opens at 0.8125 - 10 points lower than yesterday - you would think not a lot has happened the past 24 hours. However, the NZD/USD had one of its more volatile days in recent times.
The NZD/USD rallied strongly for the majority of yesterday’s trading session hitting a high of 0.8185, as the USD continued to be sold after the US Federal Reserve minutes implied they were closer to more monetary stimulus (aka quantitative easing, QE3, printing money) than the markets had previously thought.
However, the wind was taken out of the NZD/USD sails when the Chinese manufacturing PMI data came in markedly lower than expected.
The EUR/USD soared to a new 7-week high on reports that Spain is negotiating with the EU over conditions for an aid package, although not final decision to actually request a bailout has been made, well not yet anyway as it seems it is only a matter of time.
US data came in mixed overnight, with housing & manufacturing data coming in positive, while weekly unemployment claims disappointed.
The AUD/USD came under pressure after Chinese Manufacturing PMI data disappointed. The NZD/AUD moved up towards 0.7800 in response, a level last seen 7-weeks ago.
The NZD/EUR continues to roll over and give up some of the gains from its recent impressive rally. It hit a 1-month low of 0.6468, having peaked at 0.6670 3-weeks prior.
US equity indices lost ground with the Dow Jones 0.9% lower, and the S&P down 0.8%. The UK & European bourses were all down similar percentages.
The 19-commodity CRB Commodity Index dropped 0.25%. Oil prices fell 1%, while Gold rallied for the 7th straight day to USD$1670 an ounce. Copper prices surged 1.1% to a high of USD$7684 a tonne, and were other base metals prices were higher.
The NZD opens at 0.8125 USD, 0.7780 AUD, 0.6470 EUR, 0.5125 GBP, & 63.80 JPY.
NZ Trade Balance hit the tapes at 10.45am, while the RBA’s governor speaks at 11.30am.
We expect the outcomes of Friday night’s Greek bailout/reform discussions with France & Germany, together with further developments/leaks on the potential Spanish bailout will be the driving forces behind currency movements near term.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
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