By Dan Bell
The NZD/USD cracked the 0.8000 barrier overnight and traded to a new 5-week low of 0.7968. It opens this morning at 0.7980.
The mild ‘risk off’ sentiment continued overnight ahead of the hotly awaited speech by Fed Chairman Bernanke at the Jackson Hole central banker soiree.
Equities, Gold, & commodity currencies such as the NZD/USD & AUD/USD all declined.
Expectations of Bernanke announcing more near-term monetary easing have been pared back the past 2 days. ‘Risk off’ sentiment could gather steam if he doesn’t give them something however, which could see the NZD/USD fall further.
Spanish government said it would delay deciding in whether to seek a bailout until the terms are clearer. Beggars can’t be choosers……..?
Iron ore prices fell another 2%, taking the lost to a massive 12% this week.
This is weighing on the AUD/USD and AUD cross rates, which is also spilling over to the NZD. The NZD/USD & AUD/USD have broken beneath the 200 day moving average – this is generally seen as bearish.
Global equity markets were lower on the day. The US equity indices fell circa 0.8%, while the European & UK markets were between 0.4 & 1.25% lower. The Shanghai Composite Index (SSEC) was flat, although it did touched fresh 3 ½ years lows.
Oil prices dropped 0.80%, while Gold ended essentially unchanged at USD$1655. Copper prices dipped a little to USD$7,570 a tonne, and other base metals prices were all notably weaker with Nickel being the biggest lower (down 2.0%).
The NZD opens at 0.8010 USD, 0.7740 AUD, 0.6395 EUR, 0.5065 GBP, & 63.05 JPY.
There is no domestic data releases today. Private Sector Credit hit the tapes at 1.30pm from Australia.
EU unemployment and inflation data will be released tonight. However, the major focus will be on Jackson Hole and Bernanke’s speech very early Saturday morning.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
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