By Dan Bell
The NZD/USD opens around 0.8175 this morning after trading to an interbank high of 0.8208 and a low of 0.8160 over the weekend.
Chinese trade data released over the weekend was much better than expected. September exports expanded at twice the expected pace (9.9%y/y vs. 5.5% expected).
Imports rose 2.4%, after falling for the previous 3 months. Copper imports were at their highest level in 4 months and iron ore imports were the largest in more than a year.
Overall China reported a $27.7 bn trade surplus in September, the largest since June. From a year ago, China's trade surplus has risen by more than a third to $148 bn through the first three quarters of 2012.
Some analysts are suggesting this data confirms 2 things: that China’s economy is experiencing a soft landing and that their economy may have bottomed out in the third quarter.
It’s a big week of Chinese data with CPI and PPI today (2:30pm NZT), Foreign Investment on Tuesday and a big day on Thursday with Q3 GDP, Industrial Production and Retail Sales.
There wasn’t much to report on Friday night. The S&P 500 Index in the US closed down -0.3% after a lacklustre week where stocks posted their worst week in 4 months.
US Consumer Sentiment rose to its highest level in 5 years - the Thomson Reuters/University of Michigan's preliminary October reading came in at 83.1, up from 78.3 the month before and the highest since September 2007.
Standard and Poor’s downgraded South Africa to BBB from BBB+ with a negative outlook.
The EUR has been surprisingly strong- despite Spanish credit downgrades and ongoing uncertainty in Greece-the EUR/USD opens at 1.2955 this morning. The market is expecting Spain will request an official bailout soon which is seen as a positive for the EUR as it will bring down their borrowing costs.
The NZD opens at current indicative mid rates: 0.7970 AUD, 0.6315 EUR, 0.5090 GBP, 64.10 JPY.
Not much to report on the local front today. From New Zealand the focus will be on CPI data tomorrow and Fonterra Dairy Auction on Wednesday 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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