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The Opening Bell: Where currencies start for Thursday, July 4, 2013

Currencies
The Opening Bell: Where currencies start for Thursday, July 4, 2013

By Dan Bell

The NZDUSD opens at 0.7775 this morning, having hit an overnight low of 0.7711.

In a speech given yesterday afternoon, the Reserve Bank of Australia Governor caused the AUDUSD to drop sharply to fresh 34-month lows after he mentioned the RBA took a long time deliberating Tuesday’s decision to keep their cash rate unchanged.

This has been interpreted that the RBA was closer to cutting rates than the markets thought – there is now a 60% chance of a 0.25% easing in August, up from 40% previously. The AUDUSD hit a low of 0.9046.

The NZDUSD tracked the AUDUSD lower, although it did outperform. The NZDAUD raced higher to 0.8575, a level last seen late 2008.

The USD & JPY both strengthened on safe-haven buying as political tension ratcheted to crisis levels in Egypt and Portugal.

Oil prices spiked higher given a possible coup in Egypt which controls the Suez Canal – a very important oil supply route.

The markets are also fearful that Portugal may be forced to hold snap elections which could result in its exit from the international bailout.

The US ADP non-farm payroll figures came in stronger than expected. This bodes well for Friday’s highly influential and closely monitored US non-farm payrolls numbers.

Global equity market were a little mixed on the day. US equity made small gains, while other major markets showed more substantial losses.

The Gold Price rose 1% to USD$1252 an ounce. Oil prices jumped 1.5%, while base metals prices were mixed.

The NZD opens at 0.7775 USD, 0.8560 AUD, 0.5975 EUR, 0.5090GBP, & 77.70 JPY.

No domestic data today.

Australian Building Approvals hit the tapes at 1:30pm, while the RBA Deputy Governor speaks at 2.: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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