The NZDUSD opens lower and wide at 0.7770 to 0.7800 in early Monday morning trading.
The EURUSD was sold Friday after a credit rating agency downgraded France’s rating on an uncertain economic outlook. There is a risk the euro-zone crisis will flare up once again and the area is widely seen as in need of structural reform.
US data on Friday was mixed. Producer Prices came in stronger than expected which caused the USD to strengthen across the board, only to give up some of the gains when US Inflation Expectations & Consumer Sentiment both disappointed.
News that China’s finance minister indicated Beijing may be willing to tolerate economic growth significantly below 7% - it has tracking over recent years as high as 11.9%, and was last below 7% in the teeth of the global financial crisis. This is seen as a negative for so-called ‘commodity currencies’ such as the NZD & AUD.
The NZDUSD fell to 0.7757 low Friday, before bouncing back a touch.
The US economy is on a much better footing compared with other major economies. The US Federal Reserve will scale back stimulus activities before other central banks, particularly the Feds USD$85 billion bond buying program. This program is tantamount to printing money, so any reduction is interpreted as positive for USD/bad for NZD.
Global equity markets generally slightly higher on the day.
The Gold Price rose to USD$1284 an ounce. Oil climbed 1% while base metals prices were mixed.
The NZD opens at 0.7785 USD, 0.8585 AUD, 0.5950 EUR, 0.5150GBP, & 77.35 JPY.
There is no data on the domestic calendar today.
Chinese GDP data (amongst others) will be released today at 2:00pm. This will be closely watched and has significant market-moving potential.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here »
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