By Dan Bell
The NZD/USD opens lower at 0.8155 this morning after being smashed yesterday on the back of the dismay and disappointing unemployment figures.
NZ Q3 employment data disappointed in the extreme yesterday. The unemployment rate of 7.3% was the worst reading in 13-years – the NZDUSD dropped 80 points straight away, and continued to suffer overnight.
Whilst the employment figures are volatile and subject to revisions in subsequent periods, it does raise the probability of an RBNZ rate cut in the future – although this is still not ‘odds on’ yet.
Australian employment data, unlike its kiwi cousin, was better than expected – the NZDAUD rate hit an 8-week low of 0.7820 as a consequence.
In Europe, Greece managed to pass the latest austerity package amid violent protests and molotov cocktails. The European Central Bank held rates at 0.75% overnight, while German exports slid as the euro-zone’s debt crisis begins to inflict a heavy toll on Europe's largest economy.
Fears the US package of USD$600 billion in automatic spending cuts and tax increases (the so-called ‘fiscal cliff’) could crush the US economic recovery is also weighing on sentiment and the NZDUSD.
Global equity markets are all lower again today. US indices are down circa 0.5 to 1.0%, while the Shanghai index plunged 1.8%.
Gold prices climbed 0.8% to USD$1730, while Copper bounced slightly to USD$7630 a tonne. Other metals prices were mixed.
The NZD opens at 0.8155 USD, 0.7835 AUD, 0.6395 EUR, 0.5100 GBP, & 64.70 JPY.
NZ real estate institute data is the only release on the domestic calendar today, while the RBA statement from Tuesday’s monetary policy decision will hit the tapes at 1:30pm.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
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