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Appetite for risk tapers off as Bernanke cools market jets

Written by Sam Coxhead on July 15th, 2011.      0 comments

10:10 AM (NZT) The appetite for risk lost momentum in markets in the offshore session as the second half of US Fed Chairman Ben Bernankes semi-annual monetary policy report came to light. Whilst the prospect of further Quantitative Easing remains on the table, the hurdles for it to be activated are very high as inflationary pressure is significantly higher than it was 12 months ago.

For the most part the markets have consolidated in the offshore session with both the New Zealand and Australian dollars stablising below yesterday's highs. The NZD remains bouyant against the Australian dollar as the interest rate markets comtemplate the chances of a large move from the Reserve Bank of New Zealand at the December Monetary Policy meeting. Barring further escalation in offshore debt fears, the chances are high for a 25pt hike in the OCR, with chances moving towards 50pts if the economic data flow warrants it. The Q1 GDP figure yesterday was above the RBNZ expectations, so expect interest to remain high in the NZD in the coming months.

There is little in the way of domestic data for NZ and Australia today, and given the violent moves earlier in the week, there is potential for the market to take a breather today. Hopefully not famous last wrods!

    Last 24 hours trade
  Current level Low High
NZD/USD 0.842 0.8396 0.8506
AUD/USD 1.0725 1.0695 1.0787
NZD/AUD 0.7852 0.7805 0.7877
AUD/NZD 1.2736 1.2695 1.2812
NZD/GBP 0.5218 0.5205 0.5251
NZD/EUR 0.5952 0.5911 0.5967
NZD/YEN 66.67 66.17 67.10
NZD/CAD 0.8082 0.8043 0.8134