The Opening Bell: Where currencies start on Monday, August 28, 2017

By Dan Bell

The NZDUSD opens at 0.7233 (mid-rate) this morning.

The NZD starts the week marginally higher compared with Friday’s open against the USD, but has had a big move lower versus the EUR and GBP.

Federal Reserve Chair Janet Yellen speaking at the Fed’s annual conference in Jackson Hole, Wyoming offered no clues about the future of monetary policy, instead focusing on the history of the GFC crisis a decade ago and what regulators have done in response. She warned that future crises are inevitable but said the housing meltdown taught valuable lessons.

ECB President Mario Draghi also speaking at the Jackson Hole symposium stated that the Euro-area recovery is gaining ground, that Euro-area inflation convergence is not yet self-sustained, and that a significant degree of accommodation is still warranted. The EUR was stronger in response.

The U.K. Opposition Labour party announced this morning it would offer a “soft Brexit” – a clear alternative to the policies of Prime Minister Teresa May. The GBP reacted immediately and is 40 points stronger against the Kiwi since Friday.

German corporate confidence weakened slightly in August, suggesting mild nervousness over how long Europe’s largest economy can sustain its growth spurt. The Ifo Institute’s gauge of business sentiment dropped to 115.9 in August, down from the record 116 seen in July and compared with a median forecast by economists for 115.5.

An increase in U.S. orders for business equipment last month and the biggest gain since February in such sales indicate improving demand at the start of the third quarter. Durable Goods Report for July including non-military capital goods orders excluding aircraft rose 0.4% (matching est.) after little change in June shipments. Bookings for all durable goods slumped 6.8% (est. 6% decline), was the most since August 2014.

U.K. banks will be closed in observance of the Summer Bank Holiday. Major data releases this week are: U.S. Consumer Confidence on Tuesday night, U.S. Non-Farm Employment Change Preliminary GDP and Crude Oil Inventories Wednesday night, NZ Business Confidence and Aust. Private capital expenditure Thursday, Canadian GDP and U.S. Unemployment Claims Thursday night.

Global equity markets are mixed: Dow +0.14%, S&P 500 +0.17%, FTSE -0.08%, DAX -0.11%, CAC -0.17%, Nikkei +0.51%, Shanghai +1.83%.

Gold prices have edged higher up $4 or 0.3% trading at $1,289 an ounce. WTI Crude Oil prices are 0.6% higher trading at $47.80 a barrel.

Current indicative rates:

NZDUSD       0.7233       0.3%
NZDEUR       0.6047      -1.0%
NZDGBP       0.5589      -0.7%
NZDJPY         79.01        0.1%
NZDAUD       0.9135       0.1%
NZDCAD       0.9021      -0.1%
GBPNZD       1.7863       0.5%


 

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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here »

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