The Opening Bell: Where currencies start on Tuesday, July 4, 2017

By Dan Bell

The NZDUSD opens at 0.7297 (mid-rate) this morning.

Risk appetite picked up yesterday with equity markets and oil prices rallying, boosted by stronger than expected manufacturing data out of China and the US. The shift towards riskier assets has seen gold prices fall sharply.

The Caixin/Markit Purchasing Managers’ index unexpectedly rose to 50.4 in June up from 49.6 in May. The index had been expected to fall to 49.8 following May’s 49.9 result, a reading below 50 indicates contraction.

The US purchasing managers index surged to 57.8 in June, up from 54.9 in May and well ahead economists’ forecasts of a 55.2 reading. The better than expected result has seen the USD claw back some of its recent losses against the majority of its rivals.

Bucking the trend, the UK manufacturing sector expanded at the weakest pace in three months with the Purchasing Managers index falling further than expected.  The IHS Markit report showed the index fell to 54.3 in June from a downwardly revised 56.3 reading in May. The index had been forecast to edge down to 56.5.

This morning the release of NZ’s NZIER Business Confidence will dictate direction for the NZD ahead of tomorrow mornings GDT auction, while later this afternoon the latest RBA rate statement will dictate direction for the NZDAUD cross rate.

Global equity markets have turned positive – Dow +0.61%, S&P 500 +0.23%, FTSE +0.88%, DAX +1.22%, CAC +1.47%, Nikkei +0.11%, Shanghai +0.11%.

Gold prices have started the week on the back foot, down 1.6% at $1,221 an ounce. .WTI Crude Oil has started the week strongly, gaining 1.9% over the past 24hrs to be trading at $46.92 a barrel.

Current indicative rates:

NZDUSD       0.7297      -0.3%
NZDEUR       0.6424       0.2%
NZDGBP       0.5639       0.2%
NZDJPY         82.81        0.9%
NZDAUD       0.9527      -0.1%
NZDCAD       0.9488      -0.1%
GBPNZD       1.7733      -0.3%

Upcoming Data releases (NZST):

  • 10:00 – NZIER Business Confidence
  • 16:30 – RBA Rate Statement

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

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