CURRENCY: Further weakness is possible for the NZD today, however moves closer to 0.7830 should find initial support. Markets await any EU summit detail with the bar being lowered even further overnight.
RATES: More receiving interest was evident in the kiwi overnight, which followed overseas moves. Kiwi rates are expected to open a point or two lower this morning.
CURRENCY: As expected, strategic sellers in the NZD won out. The blip above 0.7940 was short lived and unsustainable in an environment that was teetering on the risk switch.
GLOBAL MARKETS: It was a case of more headline watching overnight for conclusive signals from the EU summit to emerge. Markets were relatively quiet, with a more subdued tone evident. The dataflow was uninspiring, tending to surprise on the downside, but had little impact. After trending higher over the last few days, equities retreated with the Euro Stoxx down 0.4% and FTSE 0.6%. The S&P 500 is currently 1.1% down from the previous session. Ten-year government bond yields fell in the US (1.58%), UK (1.64%) and Germany (1.51%), were unchanged in Italy (6.17%), but edged higher in Spain (6.85%) and Portugal (9.75%). A stronger USD and heightened concerns over the global economy contributed to a 1.2% fall in the CRB index, with oil down 3% to an 8-month low and gold down 1.6%.
KEY THEMES AND VIEWS
THE WAITING GAME. With no details yet emerging from the EU summit, markets remain wary. In a letter to Eurozone government heads, Greek PM Samaras has asked them to loosen budget-austerity requirements for emergency aid. With Greece in its fifth year of recession and the unemployment rate at 23%, Samaras has asked for some modifications to the austerity program, whilst also pledging to press ahead with an economic overhaul. One leg of the Troika remain open to this, with IMF spokesman Rice noting the priority of the IMF is to "listen to the new government and to hear their views", with the fund judging that the Greek government can manage the budget "for some period of time", without the next loan disbursement. Elsewhere, EU leaders are focused on immediate help for Spain and Italy, which will help chart a path out of their financial crises. According to the Finnish PM Katainen, EU government chiefs will discuss buying Spanish and Italian government bonds, to bring down their borrowing costs from near euro-era record highs. There is the realisation that a clear and unconditional policy roadmap may not emerge from the summit. German opposition and the watering down of expectations by EU officials suggest those looking for a major breakthrough at the summit will be disappointed. Another episode of "muddling through" appears to be the most likely outcome, but whether this will appease increasingly sceptical markets remains to be seen.
OTHER EVENTS AND QUOTES
� The US Supreme Court upheld most of President Obama's health-care overhaul, with the vote 5-4 in favour. Healthcare stocks slumped 0.4%, paring an earlier loss of 1.6%.
NZD/USD: Deal or no deal?
Offshore focus remains in play today as markets clearly realise EU summit developments and offshore economic data will dictate the moves in the short term. Expect the NZD to further investigate support with the first level of 0.7830 in for investigation leading into the weekend.
Expected range: 0.7830- 0.7880
NZD/AUD: Sale of the century?
Topside resistance is holding extremely well on this cross ensuring that moves higher are too hard for now. Further NZD buying interests should be filled on the downside if patience is used.
Expected range: 0.7830 - 0.7870
With the bar even lower for EU summit decisions and detail the risk of a correction of some of the recent EUR weakness is high. This should temper moves higher on this cross for now.
Expected range: 0.6290 - 0.6340
NZD/JPY: Wheel of fortune?
The inability of this cross to hold onto gains above 63JPY yesterday puts it squarely back above support at 62.17. Expect further tests of this level in pre weekend trading.
Expected range: 62.17 - 62.67
NZD/GBP: It's in the bag?
Final UK Q1 GDP data overnight helped to cushion falls on this cross. The resistance at 0.51 was too difficult to crack on this attempt and should be out of reach today.
Expected range: 0.5050 - 0.5080
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