By Dan Bell
The NZD/USD opens around 0.8005 region, having spiked briefly to 0.8050, after a volatile Friday night/Saturday morning.
The USD fell, pushing up NZD/USD, Gold & Oil prices, after US Fed Chairman Ben Bernanke said that the high US unemployment rates was a “grave concern.” Expect more monetary stimulus (QE3) unless there is improvement in the non-farm payroll figures – the next installment of this data is Friday.
Bernanke, while speaking at the Jackson Hole symposium, said the US economy faced “daunting” challenges and the Fed would act as needed to strengthen the recovery. However, he did not signal any imminent action.
Spanish interest rates surged higher – will only be a matter of time until they officially request a bailout.
The NZD/USD rally was short-lived as Chinese manufacturing data, released at 1pm Saturday, came in worse than expected. In fact, the data indicated that manufacturing had contracted which took the wind out the NZD rally.
Global equity markets were higher on the day. The US equity indices up circa 0.6%, while the European markets stormed 1.5% higher. The Shanghai Composite Index (SSEC) was fell 0.25%.
Oil prices surged 2.0%, while Gold climbed 1.8% to USD$1690. Copper prices rose 0.5% to USD$7,600 a tonne, and other base metals prices stronger with the exception of Nickel (down 0.2%).
The NZD opens at 0.8005 USD, 0.7780 AUD, 0.6360 EUR, 0.5040 GBP, & 62.70 JPY.
NZ overseas Trade Index is released at 10.45am today, followed by Retail Sales, Commodity Prices, amongst other from Australia.
The all important US non-farm payrolls hit the tapes on Friday night, however before that the EU and China will be centre stage.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
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