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 »
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