By Dan Bell
The NZD/USD surged over 3% from yesterday’s lows around 0.7740 yesterday afternoon to a high of 0.7996 overnight!
The AUD/USD put on similar gains trading to a high of 1.02, and the EUR/USD traded to a 1 month high over 1.38!
At this point the market is lost for words for a clear catalyst. Market positioning is obviously a big part of the move- investors have been piling into the US Dollar lately on fears of another financial Armageddon but the recent run of economic news has not been as bad as expected and EU policy makers appear closer to a solution (bailout).
Global stock markets have rallied overnight with the German DAX up 2.21%, the UK FTSE +0.85% while US markets are still open and currently trading up over 1.2%. Commodity prices have had a firmer night with the CRB Index up 0.2%.
The NZD opens unchanged against the AUD at 0.7830 and stronger against the other major cross rates at 0.5060 GBP, 0.5780 EUR, 61.60 JPY.
On the local front we get NZ Manufacturing Index at 10:30 and Food Price Index at 10:45. From Australia we get Employment Data at 1:30 NZT.
With the huge move overnight we are expecting the NZD to be very volatile today!
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
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