By Dan Bell
The NZD/USD opens around 0.7940/0.7960 this morning after making a low of 0.7804 overnight and a high of 0.7967.
Greece was once again the centre of the financial markets universe:
- Early yesterday the Greek Prime Minister Papandreou announced the date of the debt bailout referendum (3/4 Dec).
- The French & German officials ratcheted up the pressure level by publically stating any such move would, in effect, be a referendum on Greece's continued membership of the EU and euro currency.
- In addition, French President Sarkozy and German Chancellor Merkel warned the Greek Prime Minister Papandreou that Athens would not receive a cent more in aid until it commitments to the euro zone - Greece was due to get EUR 8 bio installment this month and will run out of money by mid December without it!
- Greece, feeling the heat, subsequently backed away somewhat from the referendum by stating if they would not be needed if discussions on a transitional government results in consensus support for the plan.
In other news, the European Central Bank surprised the markets by cutting interest rates by 0.25% to 1.25%.
Domestically, the Q3 employment report disappointed, showing unemployment rising by 0.1% to 6.6% - compared with Q2 figure (6.4% was the consensus forecast).
Global equity markets closed up showing solid gains on the day. The US Dow Jones and S&P500 indices are both 1.8% higher.
Gold prices surged 1.5% higher to USD$1763.50 per ounce. Copper and base metals made gains on the day, with the exception of Nickel.
There is no data scheduled on the NZ calendar today. Australia will be releasing its latest RBA Monetary Policy Statement this afternoon. The influential US non-farm payroll employment figures will hit the tapes tonight – this may temporarily steal the limelight from the ongoing Greek tragi-drama.
Expect continuing yoyo-ing markets (including the NZD), the Greek/EU drama to dominate headlines and market sentiment, with only cameos appearances from the US and elsewhere.
Have a nice weekend!
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
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