The NZDUSD opens at 0.8370 this morning.
The NZD soared higher after the US Federal Reserve surprised the markets by refraining to tapering their massive stimulus program. The USD got smashed across the board in immediate response and sparked a strong rally in equities, bond prices, Gold & commodities, and the NZD - risk is ‘back on.’
The US Fed cited strains in the US economy from tight fiscal policy and higher mortgage rates as reasons for maintaining the current USD$85 billion in monthly bond purchases. The markets had priced in a small tapering prior to the Fed announcement.
The Fed have stated any tapering and reduction in stimulus is very much data dependant - they require more evidence that the economic recovery can be sustain before acting.
US debt ceiling extension discussions are now likely to take centre stage. If the ceiling is not lifted by mid-October, the US Govt would run out of cash to pay all its bills – this would not be good for the USD.
Global equity markets were higher on the day – Dow +0.8%, Nikkei +1.3%, Shanghai +0.2%, FTSE -0.2%, DAX +0.5%
The Gold Price surged 3% to USD$1365 an ounce. Oil jumped 2.8% higher and base metal prices climbed up on the day.
The NZD opens at 0.8370 USD, 0.8800 AUD, 0.8555 CAD, 0.6195 EUR, 0.5190 GBP, & 82.05 JPY.
NZ quarterly GDP numbers released at 10:45am today.
Bank of Japan Governor speaks this afternoon, followed by US weekly unemployment claims, existing homes sales, and some US manufacturing data 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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