The NZDUSD opens higher at 0.7900 this morning.
The USD was sold and NZD rallied after US Federal Reserve chief Ben Bernanke said they expect to start scaling back its enormous bond purchase program later this year.
However, Bernanke also mentioned nothing was set in stone and bond buying could be reduced at a faster, or slower pace, or even increased in volume depending on economic conditions and outlook.
Bernanke acknowledged that one of his motives in talking about tapering last month has been to head off a possible bubble in financial markets. This has caused a sharp sell off in global bond and equity markets.
The NZDUSD jumped to a high of 0.7839 in the immediate aftermath of the Bernanke statement and related Q&A, only to run out of steam to trade around the 0.7900 level.
Global equity markets closed higher on the day.
The Gold Price fell 1% to USD$1276 an ounce. Oil climbed 0.4% while base metals prices were generally slightly lower.
The NZD opens at 0.7900 USD, 0.8555 AUD, 0.6025 EUR, 0.5195GBP, & 78.70 JPY.
There is no domestic data on today’s calendar.
Australian Leading Index and NAB Quarterly Business Confidence will be released early this afternoon.
US Fed’s Bernanke completes his testimony tonight.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here »
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