By Dan Bell
The NZD/USD opens lower at 0.8255 this morning in the post US election ‘risk-off’ aftermath, having nudged up towards 0.8300 earlier in the session.
The financial markets are now in ‘risk off’ mode as focus switches from the election to other pressing issues, namely:
Greek austerity vote today, which needs to be passed for Greece to receive the next tranche of bailout cash, without which the country faces bankruptcy. Many Greeks are rioting and protesting against further austerity measures.
The US ‘fiscal cliff,’ a mix of tax increases and spending cuts in the order of USD$600 billion due to start 1 January, is looming large. The US president will have a battle on his hands to get the Republicans on side to pass the necessary legislation to avoid going over the cliff.
European Central Bank president said he expected the euro zone to remain weak in the near term, and the markets remained concerned that Spain could delay seeking international aid.
These factors have further weighed on sentiment, pressing the EUR/USD & NZD/USD lower.
Global equity markets are all sharply lower, with the US indices down circa 2.0%.
Gold prices dropped 0.2% to USD$1716, while Copper plunged 1.5% to new 2-months lows of USD$7600 a tonne. Other metals prices were mixed.
The NZD opens at 0.8260 USD, 0.7935 AUD, 0.6465 EUR, 0.5165 GBP, & 65.95 JPY.
NZ employment data will be released at 10:45am today, while Australia employment figures hit the tapes at 1:30pm.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
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2 Comments
FYI Dow 312 down =12'932
..and Big Daddy listen to Tim Zell also.
Its difficult to know whats going on these days as markets are manipulated. What I can say is that over the next 6 months stock will correct 20% which in my book is a normal correction. The re-election of Obama will be much of the same issues kicking the debt down the road 10 years from now. Taxes will go up in all Western developed countries which will drag on the economies for years to come. Everywhere in the Western World the cost of living is increasing more than wage growth which is caused by money printing. Inflation is everywhere but interest rates have not risen due to subdue economies which can last for another 5 years or so. Even in Asia for example China had annual growth of 9.5%, now China growth in the past 9 months would be no more than 4% which technically would feel like a recession even though they still have some growth. The re-election of Obama is better for the world than Mick Romney but I do not see Obama lasting out this next full 4 year term due to all the head wind he will face. Unfortunately you have to be pretty gloomy for the world economy.
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