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Risk aversion hits offshore markets as growth slowdown looms

Written by Sam Coxhead on June 2nd, 2011.      0 comments

9:15 AM (NZT) In offshore markets the risk off atmosphere developed as further evidence of slowing economic conditions in the UK and US, and lesser extent Euro zone hit sentiment.  Manufacturing numbers in the Euro-zone were slightly below estimates, in the UK well below estimates and in the US far below, and this has fueled the rush towards safe havens of bonds and gold, along with the YEN and Swiss France (CHF). US equity markets all closed down over 2%, with the Dow having its largest drop in around 10months.
Subsequently there have been downward revisions for both the 2nd quarter US GDP number, and US employment growth number(due out tomorrow).
The Greek debt situation continues to be played out with the ties to the extended bailout funds being negotiated, Moody’s reduced the Greek credit rating to a couple of notches above default and left it on negative watch, the current rating places a 50% chance of a default in the next 5years. The EURO has fluctuated on the offshore session, benefitting from a weaker USD, but also getting knocked by negative EURO news.
Obviously this was displayed in the FX markets pushing the NZD and AUD lower, as can be seen from below.
Today we have Australian Retail Sales and the Australian Trade balance at 11.30am AEST.
    Last 24 hours trade
  Current level Low High
NZD/USD 0.8134 0.8133 0.826
AUD/USD 1.0602 1.0602 1.0753
NZD/AUD 0.7672 0.7649 0.7721
AUD/NZD 1.3034 1.2952 1.3074
NZD/GBP 0.4980 0.4980 0.5026
NZD/EUR 0.5682 0.5682 0.5721
NZD/JPY 65.80 65.79 67.27
NZD/CAD 0.7950 0.794 0.8012