NZD at historic highs against Euro

NZD at historic highs against Euro

By Andrew May (Sales Trader, CMC Markets New Zealand)
4 July 2012

As talks of European monetary easing and benign manufacturing data hit the global economy, there is no slow down in the appeal and attractiveness of procuring the New Zealand dollar.

Investors are actively following a 'bull' mentality, pushing up risk profiling on subset commodities and their link through to growth sensitive currencies. It's truly a great time for Kiwi's to take that overseas Italian or Spanish trip of a lifetime as the NZDEUR yield hits historic highs and outperforms itself.

We surpassed the historic euro 64c mark earlier this week before hitting a psychological barrier falling slightly, albeit well supported at 0.6395.

Currently at the open of Wednesday's trade session we find ourselves comfortably treading water at 0.6375-80. I would expect that with recent developments for the now German endorsed European banking stability fund and an impending 25bpt ECB rate cut tomorrow night we should look quite easily to retest 64c very soon. The only stick in the mud here would be a much below par Spanish banking auction - also due Thurs.

Likewise NZDUSD has defied May 2012 lows and is happily perched above 80c regardless of subdued manufacturing and non-manufacturing PMI data from our second largest trading partner China.

Our commodity index did slip 2.4% yesterday which also brought about a 5.9% drop in the latest Fonterra dairy milk powder auction, however stagnant as this may sound, our dollar is still overvalued by an IMF estimate of 15%.

Expect a relatively quieter trade session for commodity driven currencies over the next 24hrs as the US take a break in the weather for their 4 July celebrations. However we'll await any possible indications of further stimulus from the Fed at the conclusion of the NFP figure Saturday morning. Anything subdued under 90k could very well push to the down-side of NZDUSD 0.7950c and bring back certain discontent eradicating recent gains we've witnessed in US markets.

www.cmcmarkets.com

ENDS

© Scoop Media