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European debt fears escalate and push general market risk aversion

Written by Sam Coxhead on June 16th, 2011.      0 comments

9:15 AM (NZT) The general market risk aversion has increased in offshore markets overnight. The Greek debt stalemate continues, with German officials still pushing for the private sector investors to voluntarily absorb somekind of losses on principals invested. Political turmoil and civil unrest in Greece is not halping calm nerves as Greek debt sprerads to the benchmark German debt , pushes yet again to all time highs. Adding to the complication are various credit downgrades for French and Portuguese bank debt due to the current situation. This coupled with the efforts of the Irish Government to push for investors on the now state run Anglo Irish Bank to take cuts to principle payments, a call which is outside their bailout agreement, and places further pressure on the European Central Bank.

In the US , inflation printed higher than expected at .2% , but the Empire State Manufacturing Index plummted to -7.8% from the previous reading of 11.9 in May. This will bring more intense focus on the Philidelphia Fed Manucaturing Index due for release in the US later on today.

The Fonterra run Global Diary Trade auction results were softer overnight, and this may have added a little downward pressure to the NZD , which along with the AUD was trading lower due to the market risk aversion.

NZD/USD .8052
AUD/USD 1.0557
NZD/AUD .7626
AUD/NZD 1.3113
NZD/GBP .4977
NZD/EUR .5685
NZD/JPY 65.27
NZD/CAD .7885