By Dan Bell
Global markets turned negative after the European Central Bank cut interest rates by 25bps to 1% as expected but failed to announce further bond market participation. Investors were hoping the ECB might announce more aggressive bond purchases to prevent further market contagion across EU sovereign debt markets.
Many analysts do not see how the EU can survive in its current form without more aggressive intervention by the ECB, so last nights’ decision has seen risk assts take a hit with global stocks, commodities and currencies all down (S&P 500 -1.4%, CRB Index -0.5%, USD Index +0.5%))
The USD is stronger across the board on safe haven flows which has the AUD/USD down to 1.0160 this morning after making a high of 1.0378 last night.
The NZD opens lower against most of the major cross rates at current indicative levels: 0.7590 AUD, 0.5790 EUR, 0.4930 GBP and 60.00 JPY.
Not much to report from NZ today. China releases a bunch of data including CPI, Industrial Production and Retail Sales this afternoon.
The focus this weekend will be on the European Summit which kicks off tonight.
Have a great 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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