NZDUSD trades one year low as USD shines

NZDUSD trades one year low as USD shines

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

The stoic glimmer of attraction the Kiwi dollar has commanded over the past two years lost more of its shine last night in the face of a steadfast, true and a definite push back to US dollar bulls. The NZDUSD cross opens today at 0.7736 and continues its choppy range fuelled tempest since languishing heavily late last week following the FOMC minutes in which FED Chairman Ben Bernanke viewed the gregarious US economy in a rather optimistic tone. The slow spiral downward for growth currencies alongside the yellow precious commodity looks set to continue with the next level of major support for the Kiwi-US set at 0.7680 and 0.7570.

The Kiwi bounced off US 0.77c session lows pepped up through risk recovery as China’s awesome might stepped in and provided stimulus as the POBC tentatively eased liquidity concerns in an effort to stabilise credit markets noting it will still be the lender of last resort. This is a stark contrast from previous comments in which the Central bank implied responsibility was laid on the country’s largest banks to stabilise liquidity. Asian markets recovered to a certain degree alongside growth sentiment, however overseas markets viewed this nervous reaction a possible ‘European-like contagion’ to the Chinese banking sector and a bearish commodity demand. The NZD and AUD will suffer considerably if the Chinese economy continues to present growth concerns.

However, the US economy has emerged a victor. If the FOMC are lying in wait for further signs of recovery then last night’s buoyant trifecta of consumer confidence (81.4 vs 75.1exp), durable goods (3.6% vs 3%exp) and house price (12.05% vs 10.6%) data should be more than enough to turn eyelids. The might of the world’s largest economy and reserve currency showed no slowdown last night and were indeed flexing their muscles for all to see.

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