The Opening Bell: Where currencies start on Wednesday, June 28, 2017

By Dan Bell

The NZDUSD opens at 0.7276 (mid-rate) this morning.

The NZDUSD raced higher during the European trading session peaking at multi-month high 0.7340. The move was quickly reversed as ECB President Mario Draghi hawkish comments led to a sharp recovery in UK, German and US Treasury bond yields at the expense of higher-yielding currencies including the NZD.

Draghi, speaking at the European Central Bank Forum, in Portugal, fuelled market expectations the ECB will reduce stimulus later this year which has seen the EURUSD spike to levels last seen in August 2016. During his speech Draghi stated that “while there are still factors that are weighing on the path of inflation, at present they are mainly temporary factors that typically the central bank can look through.” Draghi went on to say that “any adjustments to our stance have to be made gradually, and only when the improving dynamics that justify them appear sufficiently secure.” The EURUSD is currently testing 1.1350 resistance.

This morning’s US consumer confidence data showed an unexpected improvement in June with the index rising to 115.9 from a downwardly revised 117.6 in the previous month. Economists had forecast the index to fall to 116.7 from May’s previously reported 117.9 reading.

Global equity markets are mixed – Dow -0.17%, S&P 500 -0.53%, FTSE -0.17%, DAX -0.78%, CAC -0.70%, Nikkei +0.36%, Shanghai +0.18%.

Gold prices are up 0.5% trading at $1,249 an ounce. WTI Crude Oil has continued to push higher, currently up 1.7% at $44.09 a barrel.

Current indicative rates:

NZDUSD       0.7276      -0.2%
NZDEUR       0.6411      -1.6%
NZDGBP       0.5672      -1.0%
NZDJPY         81.62        0.1%
NZDAUD       0.9585      -0.3%
NZDCAD       0.9578      -0.8%
GBPNZD       1.7630       1.0%


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

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