Bernard Hickey talks with HiFX Corporate dealer Nick Tvedt about the week's currencies and markets action after the hotly anticipated speech from US Federal Reserve Chairman Ben Bernanke at Jackson Hole last Saturday.
Bernanke did not announce a third round of quantitative easing, but stock markets took heart from Bernanke's suggestion that the Federal Reserve would do what was needed to boost the economy.
(Updated after the interview with news that US non-farm payrolls did not rise in August, which was much worse than the 66,000 growth economists had expected. The Dow fell 2.2% on the news. Here's more at Bloomberg)
Tvedt also looked at the IMF's call for 200 billion euro capital injection into Europe's banks, which was subsequently rejected by the European Central Bank.
Political agreement remains rare on the continent with more division over how to bail out Southern Europe and who should pay.
He looks at the chances for a cut in the Reserve Bank of Australia's official cash rate after slightly better than expected to retail spending.
A reduction in the gap between Australian and New Zealand interest rates is improving the relative strength of the New Zealand dollar vs the Australian dollar as New Zealand rates rise at the same time as falling Australian rates.
It continues to pivot around the 80 Aussie cent mark with support 78.5 Aussie cents and resistance at 80.5 Aussie cents.
Tvedt sees a range for the New Zealand dollar against the pound of between 53.8 pence resistance and 50.5 pence support.
Talk of more money printing in Britain is continue to weaken Sterling vs the New Zealand dollar, where the Reserve Bank of New Zealand is still expected to hike its OCR in December, further widening the yield advantage for the Kiwi dollar.
The New Zealand dollar is seen solid between 58 Euro cents and 61 euro cents, particularly given the ECB's rate hiking programme has been put on hold after very weak economic growth in Europe.
Nick Tvedt is a Corporate Dealer at HiFX, a UK-headquartered foreign exchange dealer with significant operations in Australia and New Zealand. It has a dealing room in Auckland. See more detail here.
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