Press Release – CMC Markets
The New Zealand Dollar – What a difference a day makes By Andrew May (Sales Trader, CMC Markets New Zealand)11.12 NZST, Wednesday 6 March 2013
The New Zealand Dollar – What a difference a day makes
By Andrew May (Sales Trader, CMC Markets New Zealand)
As overseas markets post record highs upon close of their respective sessions, traders are once again attracted to the lure of risk returning to portfolios as buoyancy and stability seem to return to the marketplace.
The New Zealand dollar has modestly crept forward with cautious demeanour as we open today 45pts higher to USD 0.8315. Even in the face of the Dow Jones closing up 126.56pts to an all-time high, and the NASDAQ at levels not seen since November 2000, the NZD cross rates are somewhat filled with trepidation with investors perceiving a severe retracement on the horizon. After all what comes up must come down.
Our conservative ascent above 0.83 began yesterday on the coat tails of the RBA’s decision to leave rates unchanged at 3% and culminated this morning with overseas markets fuelled through exuberant profit growth and an incredulous fortnightly Global Dairy trade auction. The auction showed that even with most of the North Island’s region depicting the worst drought in 60 years prices spiked up 10.6% shooting another shot in the arm of the Kiwi.
However, with all this remarkable news the risk on risk off ‘glass’ still seems to be perceived as half full. I have no doubt the Kiwi will remain over USD 0.75 for some time yet, but traders are refusing to show their cards and take either side just yet. After all, Reserve Bank Governor Graeme Wheeler earlier mentioned the Reserve Bank would take the necessary steps to devalue our currency should the need arise. But for now, expect further volatility and the potential push to the upside of 0.8350 on positive Australian GDP due later today and a promising Non Farm Payroll figure above 160k from the US on Saturday morning.