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Risk aversion continues

Written by Sam Coxhead on December 1st, 2010.      0 comments

The European and US sessions have continued to see the market seek safe haven assets. Along with US Treasuries and gold , the USD and JPY have been the main beneficiaries.
Concerns deepen over European Govt debt, with the focus spreading to Belgium as well as Portugal , Spain and to a lesser extent Italy. The fortunes of the EURO were not helped when Eurozone unemployment numbers showed the unemployment rate of 10.1% and for under 25s 20.1% and you can double those rates for Spain.
The one saving grace was better than expected data in the US coming in the form of manufacturing and consumer confidence numbers. As these were released the EUR, NZD and AUD were pulled off the lows, and we saw a little profit taking  to drag them a touch higher again. I think its fair to say that the EURO has a high probability of further downside in the short term and it will be a question of what extent the AUD and NZD are dragged with it.
Canadian GDP slipped to -.1% vs expected +.1%, which led to weakness for the CAD on all cross rates.
Interestingly, rumours in China yesterday of a further interest rate rise spooked the market, with the Shanghai index off 3% at one stage. For obvious reasons this negatively impacted the AUD sentiment as well.
Australian GDP today at 11.30am (AEST) with the market expecting +.5%
    Last 24 hours trade
  Current level Low High
NZD/USD 0.7460 0.7394 0.7477
AUD/USD 0.9615 0.9539 0.9660
NZD/AUD 0.7749 0.7716 0.7763
AUD/NZD 1.2904 1.2882 1.2960
NZD/GBP 0.4785 0.4765 0.4803
NZD/EUR 0.5724 0.5664 0.5734
NZD/JPY 62.34 61.86 62.93
NZD/CAD 0.7637 0.7567 0.7655