The Opening Bell: Where currencies start on Friday, May 18, 2018

By Dan Bell

The NZDUSD opens lower at 0.6874 this morning.

The USD strengthened, and NZDUSD fell, after US bond yields (interest rates) rose to 7-year high, and amid concerns over political developments in Italy could negatively impact euro zone political stability.

Rising US bond yields suggest a more optimistic outlook for the US economy – reinforced by the overnight release of much better than expected Philly Fed Manufacturing Index. This supports expectations that the US Federal Reserve will continue to lift interest rates – the USD generally performs wells in such an environment.

NZ Budget was released yesterday. There was nothing earth-shattering in the announcement and had limited impact on the NZD.

US Investment Bank, Morgan Stanley, forecast the NZDUSD to fall another 4% by end of 2018 as high NZ household debt levels leave the economy vulnerable to higher US interest rates.

The NZDAUD dipped to a 3-month low of 0.9142 overnight.

The GBP staged a short rally on reports that Britain was prepared to stay in the EU’s customs union beyond a Brexit transitional arrangement.

There is no data on the domestic calendar today.

Global equity markets were higher on the day – Dow +0.1%, S&P500 0.2%, FTSE +0.7%, DAX +0.8%, CAC +1.0%, Nikkei +0.5%, Shanghai -0.5%.

Gold prices gained 0.2% to USD$1,291 an ounce. Oil prices (WTI) rose 0.1% to USD$71.56 per barrel.

Current indicative rates:

NZDUSD 0.6874 -0.3%
NZDEUR  0.5828 -0.2%
NZDGBP 0.5086 -0.5%
NZDJPY 76.14 0.2%
NZDAUD 0.9154 -0.2%
NZDCAD 0.8801 -0.2%
GBPNZD 1.9662 0.5%

 

 

 

 

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

Daily exchange rates

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USD 
NZD
End of day UTC
Source: CoinDesk

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