By Dan Bell
The NZD/USD opens around 0.8260/0.8280 after trading in a relatively tight range overnight.
The NZD was under pressure yesterday and made a low of 0.8230 but managed to claw back these losses yesterday afternoon and trade to a high of 0.8285 overnight.
There wasn’t any significant news overnight to drive markets. The US Dollar is firmer against most major currencies over the last 48 hours as the euphoria from the Fed’s QE3 announcement wears off.
US stocks are mixed with the S&P 500 down 0.19% while the Dow Jones Index is up 0.09%. Commodities are generally lower with oil prices down 1.13% - although silver prices were up 1.32%.
China’s Shanghai Composite Index shed 0.91% yesterday erasing most of the gains following the Fed’s stimulus announcement last week. China’s main stock index is down over 15% from highs earlier this year.
Dairy prices were up 2.4% at Fonterra’s Global Dairy Trade auction overnight. This has the Trade Weighted Index up 16.2% since early August as US drought conditions continues to put upward pressure on global food prices.
The NZD hit a 5 month high against the AUD over 0.79 after the RBA Minutes increased the odds of a rate cut from the RBA at their next meeting in October.
The NZD is trading opens at current indicative mid rates against the major currencies- 0.7920 AUD, 0.6340 EUR, 65.10 JPY.
From NZ today we get the Balance of Payments which has not been a market mover for some time but always worth looking at our external debt position in light of ongoing global credit concerns.
Tomorrow we get Q2 GDP which will be of more interest and may have a bigger impact on the Kiwi if we come in weaker than expected.
Later today the Bank of Japan announces their latest monetary policy decision. Some are looking for another round of ‘money printing’ from the BOJ which would be positive for risk sentiment.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
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