By Dan Bell
After trading to a high of 0.7900 overnight, the NZD/USD has followed weaker stocks and commodities and opens back under 0.7800 this morning. Current indicative interbank levels are 0.7760/0.7790.
Yesterday’s rally in global markets has waned overnight as investors await further news on European debt issues.
While there is a sense that policy makers are acting with more urgency at the moment, markets remain nervous. The key announcement over the next 24 hours is Germany’s vote on the enhanced EU bailout fund tonight (EFSF).
EU and IMF inspectors will return to Greece in the next 24 hours to decide whether they have done enough to secure another tranche of bailout funds.
Global equity markets are weaker overnight with US stocks currently down 0.5-1.%.
Commodity prices have been slammed with the CRB Index down 2.5%, led by copper prices off almost 6% and oil prices down 3.5%.
The NZD has underperformed against most major currencies overnight and is 0.8% weaker on a trade weighted basis- we open around current indicative levels: 0.7920 AUD, 0.5730 EUR, 0.4995 GBP, 59.60 JPY.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
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