By Dan Bell
The NZD/USD made a 7 month low around 0.7452 overnight on continued risk aversion and opens under 0.7500 this morning.
News that the US super committee tasked with reducing the budget deficit by $1.2 Trillion have failed to reach an agreement has contributed to further weakness across global markets.
US stock markets are down 2% while commodities are off across the board with the CRB Index down 1.4% led by oil prices down 1.4%. Even gold prices are down shedding 3% overnight.
Credit rating agency Moody's warned that rising debt costs and weaker GDP is negative for France.
Spain's bond yields rose on Monday, despite a clear-cut victory for austerity-committed conservatives in Sunday's election.
The US Dollar Index is trading near six week highs as investors seek the perceived safe haven status of US treasuries. The AUD/USD hit a low of 0.9805 while the EUR/USD pushed into the low 1.34’s.
The NZD is down over 0.6% on a trade weighted basis and continues to make new recent lows against the European cross rates. Current indicative levels are as follows: 0.7590 AUD, 0.5530 EUR, 0.4770 GBP, 57.50 JPY.
On the local front the RBNZ survey of 2-year inflation expectations is released at 3pm and will be of interest .Nothing to report from Australia.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
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