The NZDUSD opens lower at 0.8070 this morning.
Another milk export scare, this time from Westland Milk Products, was largely ignored by the NZD.
US bond market interest rates rose overnight, with 10-year Treasury yields climbing to 2-year highs, signalling that the US Federal Reserve could be moving closer to reducing the levels of monetary stimulus. Higher US interest rates are generally seen as supporting the USD which would place downward pressure on the NZDUSD.
The NZDEUR fell on EUR strength after the German central bank suggested the European Central Bank’s low interest rate pledge last month was not set in stone and would depend on the medium-term inflation outlook.
Main focus of this week is the US Federal Reserve interest rate meeting early Thursday morning. The market will be looking for any indication on when the Fed is likely to begin tapering its massive USD$85 billion monthly bond purchases, as well as their outlook for the economy in general.
Chinese manufacturing data, to be released Thursday afternoon, will also garner a lot of attention. Any disappointment will be negative for commodity based currencies such as the NZD & AUD.
Global equity markets were most down the day – Dow -0.5%, Nikkei -0.8%, Shanghai +1.2%, FTSE +0.5%, DAX -0.3%
The Gold Price fell 0.6% to USD$1367 an ounce, after hitting 2-month highs earlier in the session. Oil dropped 0.8%, and base metal prices also moved lower on the day.
The NZD opens at 0.8070 USD, 0.8855 AUD, 0.6050 EUR, 0.5120 GBP, & 78.75 JPY.
RBNZ Governor Wheels speaks on Macro Prudential Policy at 2:00pm, followed by Inflation Expectation data at 3:00pm today.
Australian Monetary Policy Minutes hit the tapes at 1:30pm.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here »
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