fxmatters

The NZ dollar bounce did come, the trigger being the Budget. It could just have easily been news from the dairy sector, news that is still to come in the form of higher export earnings (due today) or a high 2008/09 payout (due sometime within the next month). Both are factors, along with the too-high inflation rate, that will hold back the RBNZ from easing in the next couple of months. Expectations of RBNZ rate cuts had simply become too great within the markets … Read Budgeting for currency movements

• 26 May 1908 – first Middle East oil strike comes in Iran’s Masjed Soleyman, 100 years ago, and days ahead of the letter already in transit from London calling off exploration as money had run out. The oil company formed was later to become BP.
• June – NZD/CAD down in 8 of last 10 months of June.
• 1 June 1998 – The European Central Bank (ECB) is created.

• 23 May 1788 – Lewis Tappan, father of the credit rating industry is born (his firm eventually to become Dun & Bradstreet).
• 25 May 1916 – Henry Ford says “History is more or less bunk. It’s tradition. We don’t want tradition. We want to live in the present and the only history that is worth a tinker’s damn is the history we make today” – he could well have been espousing the Efficient Market Hypothesis.

A plot of the NZD/USD last week resembles a crooked smile, down first then up again. It will no doubt be a little unsettling to exporters … Read The Australia influence

• 16 May 1866 – The US Congress eliminates the half dime coin and replaces it with the five cent piece, or nickel.
• 17 May 1792 – The New York Stock Exchange is formed.
• 18 May 2007 – As a reminder of how far prices/rates have come, USD prices on the day were oil $65 (now $126), gold $662 ($886), wheat $471 ($804) and euro $1.35 ($1.55).

Two things changed that have increased the downside risk for the NZ dollar. There was further news of slower NZ growth. And there was a quick return to risk aversion offshore. The net effect was a NZD/JPY down 3.7%. But further falls rest on the timing of an RBNZ rate cut … Read Awaiting an RBNZ easing

• 8 May 1884 – Harry Truman born, later to become US President and to remark “It’s a recession when your neighbour loses his job; it’s a depression when you lose yours”, a saying likely to be heard often in the US again this year.
• 11 May 1998 – first euro coin minted, to then be tested by French Foreign Minister Dominique Strauss-Kahn with a bite on the coin “to see if it’s real”.

It’s all over. Well that is what market activity and commentary would suggest last week. Global share indices generally rallied for the third week in a row. Gold is now 17% off its highs. Where are the downside risks? … Read A collective sigh of relief