The Opening Bell: Where currencies start for Tuesday, May 20, 2014

By Dan Bell

The NZDUSD opens slightly lower at 0.8625 this morning after a very quiet overnight session.

The NZD traded in a tight range overnight, despite stronger than expected NZ Producer Price Index (PPI) numbers (1.0% versus 0.5%) released yesterday.

The PPI figures are a leading indicator of the Consumer Price Index (CPI) and the high PPI reading supports the tightening bias of the RBNZ.

The USD was pressured by declining US Treasury Yields. Mixed economic data, weakness in the US housing sector, and comments from a Fed President that it is not appropriate for the Fed to start to raise interest rates until the second half of 2015 are weighing on bond yields - this is restraining the USD from making any sustained gains.

The GBP was subdued on expectations the Bank of England will step in to cool the UK housing market and after AstraZeneca rejected Pfizer's GBP 70 billion takeover offer.

Global equity markets were mixed on the day - Dow +0.1%, Nikkei -0.6%, Shanghai -1.4%, FTSE -0.2%, DAX +0.3%

Gold prices are flat at USD$1292. Oil prices fell by 0.4%.

The current indicative mid-rates are:

NZDUSD             0.8625
NZDEUR             0.6290
NZDGBP             0.5130
NZDJPY                87.55
NZDAUD            0.9245
NZDCAD            0.9380

There is no data scheduled on the domestic calendar today.

The Reserve Bank of Australia Monetary Policy Meeting Minutes hit the tapes at 3:15pm, followed by a speech from the RBA Assistant Governor at 4:30pm.

UK inflation and some US Fed-speak will be reported overnight.

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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here »