By Dan Bell
The NZD/USD opens around 0.8340 this morning down 150 points from yesterday’s opening levels.
The NZD came under pressure yesterday afternoon after RBNZ Governor Wheeler said the NZD is significantly overvalued compared to its economic fundamentals.
In a speech to the New Zealand Manufacturers and Exporters Association the Governor suggested a wide range of policy responses to lowering the NZD but emphasised there are no quick fixes.
After looking at the speech again this morning I get the feeling the market has over reacted and focused on the potential for ‘intervention’ when this was more of an academic discussion.
The Kiwi extended its losses overnight after risk asset came under pressure with most stock markets and commodities down overnight- the S&P 500 is currently down 0.59%.
The NZD opens at current indicative mid rates: 0.8140 AUD, 0.5480 GBP, 0.6284 EUR, 78.34 JPY, 0.8492 CAD.
The FOMC minutes released this morning showed that a number of voting members are concerned about the Fed’s stimulus measures although no change appears imminent.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
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