By Dan Bell
The NZD/USD opens around 0.8197 this morning after dipping to a low of 0.8190 overnight.
The recent rally in global risk assets ran out of steam after the Greek debt deal was announced yesterday.
Greece has managed to get an easing in their debt servicing obligations through lower interest rates, deferred payments and lengthening of their debt maturity schedule.
None of this changes the fact Greece is still in a significant economic depression, but it does buy them more time.
While policy makers have agreed in essence to the next tranche of aid to Greece a formal decision will not be made until 13th December. A number of parliaments need to approve the deal and Greece needs to conduct a bond buy back with private sector investors, so plenty to keep the market guessing.
Global stocks are mostly weaker overnight with the S&P 500 down 0.31%. The EUR/USD is down almost a cent from recent highs over 1.30 and the AUD/USD opens at 1.0450.
US economic data continues to improve - consumer confidence in November hit the highest level in more than four years and home prices in September rose for an eighth straight month.
The market remains cautious as the US fiscal cliff fast approaches. On the 1st January 2013 approx US$ 600 billion in spending cuts and tax increases will begin to kick in which will send the US economy into a recession- the US Congress and the Whitehouse are currently negotiating a plan to avoid this.
The NZD opens at current indicative mid rates: 0.7846 AUD, 0.6336 EUR, 0.5115 GBP, 67.30 JPY and 0.8155 CAD.
NZ Trade Balance numbers for October yesterday showed a bigger than expected deficit of $718m (exp 500m), with exports down approx 11% yoy - showing a continued deterioration in NZ’s external accounts.
Not much to report on the local front today. Risk sentiment will continue to be the key driver for the Kiwi.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
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