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The volatility continues as risk aversion eased in the US session

Written by Sam Coxhead on June 17th, 2011.      0 comments

2:50 PM (NZT) The choppy nature of the price action this week continues as risk aversion eases a little in the US session and this continues into Asia.

The fears about the Greek debt situation have lowered as the IMF pledge to pass the 5th tranche of the current Greek bailout that will provide funding for Greek debt repayments in the short term. The tensions in Europe remain with German officials still at odds with the French, and IMF and EU officials about whether or not private bondholders should carry some of the funding burden for the required second Greek bailout.

But in the meantime, the complexity of the situation continues as the Greeks try to put together a new governmental setup in the face of civil unrest on the streets of Athens.

In the US, while the Philadelphia Fed manufacturing Index was much weaker than analyst expectations, housing numbers, weekly jobless claims and the Current Account were all better than expected. Stocks saw modest gains and this has continued into Asia and the US dollar has given up some of the week's gains as a consequence.

The NZD and AUD have rebounded from the lows seen in the late Asian session yesterday, with the appetite for the NZD outweighing the AUD as the interest rate market in Australia discounts the RBA comments about future rate hikes.

Those looking to make money transfers from both NZD and AUD to Great British Pounds look to have another opportunity at great value rates as the risk appetite continues in the current session. The EURO has bounced of its lows also, with various central banks noted buyers, squeezing out sold EUR investors, and further adding to the bounce back to the topside.

Apart from further "noise" expected on the European debt front, the focus will be on the consumer sentiment number due for release in the US. Many commentators are looking for a further rebound in the US dollar over the next week or so , and this will provide opportunities for those looking to transfer funds from the US into AUD and NZD in particular.

Crucial support remains at 1.0440 in the AUD/USD and .7950 in the NZD/USD pair.

Expect the NZD/AUD to remain in the .7580-.7680 range (1.3020-1.3190 AUD/NZD) in the short term , ahead of the Reserve Bank of Australia Monetary Policy Meeting minutes Tuesday next week.

Current prices :
NZD/USD .8050
AUD/USD 1.0543
NZD/AUD .7635
AUD/NZD 1.3097
NZD/GBP .4992
NZD/EUR .5677
NZD/JPY .6490
NZD/CAD .7915

Topics: AUD, European debt, GBP, Greek debt, Money transfers, NZD, USD