By Dan Bell
The NZD/USD opens at 0.8280/0.8295 after hitting a six month high of 0.8350 on Friday night.
The main driver of NZD/USD strength was the Fed’s QE announcement on Thursday which for many was more aggressive than expected.
The announcement that they will purchase US$ 40bn worth of Mortgage Backed Securities every month is open ended which implies they will continue the program until they get their desired impact - a meaningful improvement in US employment conditions - which might be some way off as the US approaches their ’fiscal cliff’ next year.
The EUR has been one of the strongest currencies over the last few days with the EUR/USD taking out key levels of 1.30 to make a high of 1.318. NZD/EUR has been under pressure as the EUR out performs and opens at 0.6310 this morning. Does this mean the European debt crisis is over?
Global stocks continued to rally with the S&P 500 up 0.4% on Friday - which means US stocks are at their highest levels since Dec 2007. US Consumer sentiment and retail sales data were better than expected.
The NZD opens at 0.7840 AUD, 0.51 GBP, 64.80 JPY, and 0.6310 EUR.
Nothing much to report on the local front today. From NZ this week we get Current Account, latest Fonterra dairy trade auction and GDP numbers.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
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