11.06 NZST, Wednesday 27 February 2013
European markets sees risk unwound
By Andrew May (Sales Trader, CMC Markets New Zealand)
The New Zealand dollar truly has a fight on its hands to keep its head above the 82c mark after falling nearly 120
points since Monday's open, currently trading at 0.8250.
This has seen markets broadly shift the risk aversion gear stick from second well and truly into fourth. Gold bulls
flight to fancy has pumped the bullion price up $20 to USD$1615 oz as traders seek safe haven depots alongside the
Japanese yen.
The Kiwi has fallen against all peered crosses and is seeking to re-establish supports that will quantify its attraction
as an alternate risk asset. NZDAUD is once again toying with 80c having fallen 90 points in a clear channel this week
breaking past a 23.6% Fibonacci retracement further cementing a short term fall towards 0.8030 finding support at
January's 0.7980 levels.
The clear sell off in overseas markets and increasing bond yields that culminated yesterday, continues to disrupt
European markets with what seems to be an already hung jury looming in the Italian election. Expect more white noise in
both the currency and equity markets as a consequence of the uncertainty with the VIX up 30%, the biggest jump in two
years to 17 points.
US markets have held their own overnight gobbling down a three course delight that began with stronger than expected
Consumer confidence figures (69.6 vs 62) followed by buoyant January home sales numbers that boosted almost 16% against
estimates of 3%. Federal Reserve Chairman Ben Bernanke's comments reaffirmed the current stimulus package would not be
overshadowed anytime soon. The DOW closed up 115 points recovering some of Monday's catastrophic sell off to 13,900.