By Dan Bell
The NZD/USD opens at 0.8195.
The USD and US equity markets rallied after the release of better then expected US non-farm payrolls employment figures.
They showed the US economy generated 236,000 jobs in February, compared with 160,000 expected, and the unemployment rate fell from 7.9% to 7.7%.
However, the good numbers were tempered somewhat as January payrolls were revised down and the labour force participation rate (which is the number of people in the labour force, employed or unemployed but seeking employment, expressed as a % of the population) fell to lows last seen in 1981!
The NZD/USD fell to a new 2013 low of 0.8190 in response to the payrolls figures and the resurgent USD. The USD hit 3 years highs against the JPY and 3-month peak versus the EUR.
The US Dow Jones index rallied to another all-time high. The BNY Mellon capital flows data showed there has been net purchases of USD over the past 4 months, and a significant portion of recent stock purchases have come from foreign investors, which is also supporting the USD (and weighing on the NZD).
The RBNZ has an interest rate setting meeting on Thursday - rates are uniformly expected to remain at 2.50%.
The accompanying statement will be an interesting to see the bank’s view on future path of rates given the increasingly negative impact of the central North Island drought being balanced against the strong Auckland & Christchurch property markets, and the impact of the Christchurch re-build.
Gold price rose marginally to USD$1577 an ounce. Base metal prices were mixed - Copper prices fell on concerns about increasing supply, with Tin & Nickel gained.
World equity markets were higher across the board with the exception of the Shanghai index which fell 0.5%. The US Dow Jones & S&P500 indices gained 0.45%, while UK & Euro-zone rose between 0.6% & 1.4%.
The NZD opens at 0.8195 USD, 0.8030 AUD, 0.6310 EUR, 0.5495 GBP, & 78.60 JPY.
There is no domestic data to be released today. Thursday’s RBNZ rate decision being the most important event on the local calendar this week.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
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