Sharechat Logo

Morning FX thoughts

Tuesday 26th July 2011

Text too small?

There was little to excite markets last night. The US debt ceiling discussions remained the focal point but there was no material progress, rather a continuation of the piecemeal approach to negotiations. US equity markets were initially disappointed by this, the S&P500 falling 0.8% at the open, although it has recovered slightly to be -0.4% currently. Commodities are 0.6% lower, oil down 0.7%, but gold acted as a safe haven and made a fresh record high of $1624. US 10yr treasury yields spiked 7bp to 3.03% on growing concerns of a sovereign ratings downgrade, later settling at 3.00%. Eurozone peripheral debt was weaker, 10yr yields up 26bp for Italy and Spain, possibly affected by Moody’s three notch downgrade of Greece to Ca and comment that bond investors would likely take substantial losses as a result of the latest EU rescue plan.

The US dollar index unsuccessfully tested key support at 74.0 a couple of times. EUR consolidated just below trend resistance (from May) at 1.4420. The Swiss franc was a clear outperformer amid the US debt ceiling uncertainty, USD/CHF making a record low of 0.8021 during the London morning. USD/JPY made a four month low of 78.06 at the same time. AUD was helped by the US equities recovery and rose from the Sydney closing level of 1.0811 to 1.0877 in NY. NZD made a fresh high (just) at 0.8677. AUD/NZD rose from 1.2500 to 1.2550.

AUD/USD and NZD/USD outlook next 24 hours: As long as 1.0800 major support holds, AUD can continue its push towards 1.1012. RBA Governor Stevens speaks today in Sydney – a good opportunity to provide insights on monetary policy. NZD has a similar line in the sand at 0.8580 today, moderate event risk from today’s NZ trade balance report.

Source: Westpac Global Markets



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar gains on G20 preference for growth
NZ dollar dips as Wellington CBD checked for quake damage
NZ dollar gains, bolstered by RBA minutes, strong dairy prices
NZ dollar falls after central bank says it may scale up currency intervention
NZ dollar gains before CPI, helped by dairy gains, rally on Wall Street
NZ dollar trades little changed as US budget talks bear down on deadline
NZ dollar falls with equities on view US to sail over fiscal cliff
NZ dollar weakens as fiscal cliff looms, long bets unwind
NZ dollar sinks to three-week low as equities fall, fiscal talks in focus
NZ dollar slips as fiscal cliff talks grind slower in Washington