By Dan Bell
The NZD/USD opens around 0.75 this morning after trading to a low of 0.7485 and a high of 0.7577 overnight.
Anxiety about the EU debt crisis remains the key driver across global markets. Italy had to pay a euro-era record 6.47 % on its new five-year bonds, compared with the previous record of 6.3% set in November.
Stocks are lower across the world with European markets down 2-3%. The US has another 90 mins before they close and is currently down 1%.
The EUR/USD continues to slide dropping under 1.30 overnight. The AUD/USD has followed suit and opens around 0.99 this morning.
Commodities are weaker across the board - particularly gold prices down over 3%.
The Norwegian Central Bank surprised the market and cut their key rate by 50 basis points to 1.75% and said the EU debt crisis was beginning to impact their banking sector- might give the RBNZ some ideas for next year?
One positive overnight- Germany raised 4.2 bn euros in an auction of two year bonds at a record low yield of 0.29%- looks like investors are still more than happy to fund Europe’s largest economy with cheap money!
The FOMC statement yesterday has also contributed to overall negative sentiment overnight. The US Central Bankers were more upbeat about the US economy and gave no guidance on further policy measures to offset the EU debt crisis.
The NZD is weaker against most major cross rates and opens at current indicative levels- 0.5780 EUR, 0.7570 AUD, 0.4855 GBP and 58.50 JPY.
Not much to report on the local front - NZ Manufacturing Index at 10:30 this morning.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
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