The NZDUSD opens lower at 0.7595 this morning.
The NZD fell sharply across the board yesterday after RBNZ Assistant Governor John McDermott’s speech highlighted the possibility of interest rate cuts.
Domestic demand and inflation would both need to weaken before any rate cut comes into view; however rate hikes are firmly off the table.
The NZDAUD stepped further away from the ‘parity part’ in response to McDermott’s speech, although uptrend remains intact. The NZDAUD dipped to 0.9735, while the NZDUSD traded to a low of 0.7538.
The USD fell on weaker-than-expected US economic data - US new home sales declined 11.4% in March, while factory activity slowed and weekly jobless claims rose. This fanned concerns about the strength of US economic growth and helped push up the NZDUSD from the overnight lows.
Elsewhere, China’s factory activity contracted at its fastest pace in a year in April, according an HSBC report, suggesting economic conditions are continuing to deteriorate.
Greece appears to have scrapped enough cash together to meet its obligations into June, alleviating fears of an imminent default. However, the crisis is far from resolved.
Global equity markets were mixed on the day – Dow +0.4%, Nikkei +0.3%, Shanghai +0.0%, FTSE +0.4%, DAX -1.2%
Gold prices bounced $8 higher to USD$1,194 an ounce. Oil prices (WTI) jumped 2.4% to USD$57.66 per barrel.
The current indicative mid-rates are:
NZDUSD 0.7595
NZDEUR 0.7015
NZDGBP 0.5045
NZDJPY 90.80
NZDAUD 0.9760
NZDCAD 0.9230
There are no data releases on the domestic calendar today.
Euro zone finance ministers meet with Greeks debt/funding situation likely to be the main focus of discussion.
US Durable Goods Orders figures hit the tapes overnight.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here »
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