By Dan Bell
The NZD/USD opens at 0.839 after making a low of 0.8313 and a high of 0.8417 overnight.
Most European markets closed lower, and the US initially followed suit, but at approx 4am NZT US equities rallied strongly - the S&P 500 shot up over 1%, Dow Jones Index broke through key 13,000 level - the NZD/USD and AUD/USD went for the ride - both surging almost a cent. (US stocks gave up many of their gains in the final minutes of trade. The Dow closed down 1 point and failed after repeated attempts to close above the key 13,000 level).
At this stage no specific catalyst for this morning’s move has been noted. Month end positioning may be at play.
Most equity markets have had a strong February so Investment Fund Managers will need to re-hedge their positions - i.e. as the value of their offshore shares go up they must increase their ‘long’ NZD positions to match increased valuations.
The German parliament passed the second Greek bailout but the EUR is weaker overnight.
The NZD is up against the EUR at 0.626 and GBP at 0.53 but is marginally weaker against AUD at 0.7805 and off recent highs against JPY at 67.50.
Not much to report on the local front.
Tonight the focus will be on US Core Durable Goods Orders and Consumer Confidence.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
(Updated with Dow close)
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