The NZD/USD opens around 0.8390 this morning, falling over 150 basis points from recent highs after a turn in risk sentiment yesterday afternoon.
The catalyst for the move was a rise in China’s money market rates after it was reported Chinese banks tripled bad loans the first half of the year.
Global equities have been under pressure over the last 24 hours with S&P 500 currently down 0.5%. Oil prices continue to slide down 1.44%. Gold prices are also weaker down 0.69%.
The NZD has been one of the worst performing currencies overnight and is weaker against most major cross rates: 0.8717 AUD, 0.6087 EUR, 0.5190 GBP, 81.66 JPY, 0.8713 CAD.
Inflation data from Australia yesterday was stronger than expected, reducing the odds of another rate cut from the RBA. The AUD/USD rallied to a 5 month high around 0.9750 following this news but opens this morning around 0.9620.
The Bank of Canada left interest rates on hold at 1% overnight and removed any tightening bias from their statement. This pretty much means the RBNZ is the most hawkish central bank in the developed world at the moment!
From New Zealand we get Trade Balance numbers this morning at 10:45am. This afternoon the focus moves back to China with their Flash Manufacturing PMI is released at 2:45pm.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here »
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