New Zealand dollar
NZD still trading in tandem with equity markets. The NZD opened just under 0.7600, however good buying interest first up helped carry it through this level en route to an intraday high of 0.7630 ahead of October merchandise trade data. The data showed a deficit that was larger-thanexpected but had little impact on the currency as it spent the rest of the day trading a 0.7600 to 0.7620 range. Overnight the NZD dipped slightly below 0.7600 but recovered only to fall away again as stop loss orders around 0.7570 were triggered. This led to a sustained fall to 0.7544, with the market once again focused on risk aversion and the all important performance of the Dow Jones Index.
Australian dollar
AUD rallies after election then tumbles on risk aversion. The AUD opened on its lows and steadily climbed higher drawing support from gains in regional equity markets. A decisive result in the country’s general election also boosted sentiment. With Asian equity gains laying the groundwork for a revival in the carry trade, the AUD strengthened overnight to a session high of 0.8870 then fell away quickly as a raft of negative news hit the wires. This saw the AUD return to opening levels.
Major currencies
USD slips against yen on China reserves news. Although the USD was largely range-bound yesterday, sentiment remains negative with year-end liquidity concerns and expectations of further reductions in US interest rates weighing. The USD fell to a low of 108.03 against the yen following reports that China is to invest its reserves in Japanese equity markets, while the euro ranged between 1.4806 and 1.4887. Despite comments from the ECB’s Wellink that Eurozone growth is likely to be revised downwards and a further rise in the euro against the USD would be “worrying”, many market participants continue to anticipate a break of the psychological $1.50 level.
Economic data and events
No data to report.
