By Dan Bell
NZD/USD traded to a low of 0.8230 overnight following Moody's downgrade of Portugal by 4 notches to junk status.
The credit rating agency said there is a risk the country will need a second round of official financing ('bailouts') before it can return to capital markets.
The EUR/USD dropped from 1.4550 to a low this morning of 1.4395.
The US dollar was stronger across the board as risk appetite turned negative and the 'safe haven' currencies were back in favor.
The AUD came under pressure yesterday afternoon after the RBA left interest rates on hold at 4.75% and revised down their growth outlook for 2011.
NZD/AUD traded to a high of 0.7764 yesterday following the RBA decision but has run out of momentum and is back in the low 0.7700's this morning.
Fonterra auction results this morning have come in weaker than expected down 6.8%.
The NZD remains firm against the EUR over 0.5700, slightly weaker against GBP at 0.5130 and JPY at 66.80
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
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