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Westpac Global Markets Strategy Group: Morning FX Thoughts - NZ Edition

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Fuseworks Media
Fuseworks Media
Westpac Global Markets Strategy Group: Morning FX Thoughts - NZ Edition

Asset classes diverge on Fed rumours. Various analyst reports (some a day old) gained traction suggesting the Fed could signal a fresh round of significant quantitative easing as early as next week's FOMC meeting, staggered purchases of up to US$1t in government bonds mentioned. The brunt of the market impact occurred during the NY morning, US dollar selling and treasuries buying the notable responses. US equities were relatively muted, the S&P500 currently unchanged. The CRB commodities index rose around 1% to major April and July resistance, the precious metals largely responsible (gold +2.3% to $1275, a fresh record). US 10yr treasury yields are 9bp lower on the day at 2.66%.

The US dollar fell 1.2%, breaking the month-long neckline at 82.0 to reach 81.0, and underperformed against all the majors. EUR did the reverse, breaking higher to a 1.3034 high a few hours ago. Outperformer Swiss franc gained 1.3% on the day. USD/JPY made a fresh post-1995 low of 82.93. AUD surged at the NY open from 0.9350 to 0.9457, breaking above long-standing resistance around 0.9400, and forming a post-August 2008 high. NZD surged from 0.7280 to 0.7395, July's resistance level holding. AUD/NZD peaked at 1.2828 in Europe, dipping briefly on the Fed rumours before settling above 1.2800.

AUD/USD and NZD/USD outlook next 24 hours: AUD is due for a pullback after its multi-week rally, 0.9360 providing minor support today. NZD is also due for at least a minor correction, initial support at 0.7350.

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