The USD extended recent gains overnight, as US stocks led the way lower in the biggest down day for US indices so far this year.
A perfect storm of factors are responsible:
- Argentina is effectively now in default
- The largest rise in US wages since 2008
- Disappointing European earnings
- Soft Eurozone inflation data – inflation readings have been below 1% for 10 straight months now
- More troubles for Portugal’s banking sector
Oil futures are also trading sharply lower at fresh 2 month lows.
US non-farm payrolls data is released tonight, with economists expecting 230,000 jobs gained in July. In the current context a strong number would suggest more chance of the Federal Reserve tightening monetary policy, not good for stocks, very good for the USD.
Current indicative mid rates:
NZDUSD 0.8495
NZDEUR 0.6345
NZDGBP 0.5030
NZDJPY 87.35
NZDAUD 0.9140
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here »
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