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Investors flee the NZD and AUD as risk aversion gains momentum.

Written by Sam Coxhead on September 23rd, 2011.      0 comments

9:15 AM (NZT) The carnage on global markets continues in the wake of the latest Federal Reserve announcement of monetary policy. With equity markets leading moves lower in risk assets, the NZD and AUD have been aggressively sold. The main beneficiaries of this heightened risk aversion are the Japanese YEN and the US dollar. Japanese authorities will be seriously considering intervention, but at this stage it would seem to be unlikely ahead of the G20 meetings this weekend. The equity markets seem to be very unhappy that the Federal Reserve did not do more to stimulate the economy, and are behaving like a spoilt child demanding more sweets (quantitative easing). Chinese manufacturing data yesterday revealed the third straight month of contraction, another sign that all is not well in the global economy.
Global yields have moved steadily lower. Commodities are under continued pressure. We have political, financial and economic uncertainties around the globe, so at this stage expect any rebounds to be limited. Both the NZD and AUD are close to further key support levels against the USD, at .7750 and .9700 respectively. A consolidated break of these key levels would open up the way for another leg lower.
    Last 24 hours trade
  Current level Low High
NZD/USD 0.7790 0.7754 0.8064
AUD/USD 0.9741 0.9692 1.0079
NZD/AUD 0.8002 0.7938 0.8015
AUD/NZD 1.2497 1.2477 1.2598
NZD/GBP 0.5079 0.5054 0.5191
NZD/EUR 0.5789 0.5766 0.5926
NZD/YEN 59.39 59.11 61.78
NZD/CAD 0.8017 0.7994 0.8111