NZD.
The kiwi traded lower in Wellington on Tuesday. The New Zealand dollar fell by the wayside, but other currencies were in the high light, such as the Japanese yen and the Australian dollar.
As expected, the Reserve Bank of Australia enhanced the key interest rate by 25 basis points to 3,75% and on the back of this data the kiwi sharply dropped and as well it rapidly grew.
The Reserve Bank of Australia\'s decision underlined the growing difference between the interest rates in Australia and New Zealand which currently amounts to 125 basis pips.
Considering the fact that the Reserve Bank of New Zealand promises to keep the key interest rate at the level of 2,5% till the second half of 2010, it will make a downward pressure on the kiwi.
USD, JPY, AUD and CHF.
The US dollar declined against the most part of major currencies during the trades on Tuesday, due to easing of Dubai debt default fears, causing the investors to buy shares, commodity goods and high – yielding assets again. The weakening fears considering the fact that the crisis situation with Dubai debt instruments will spread on other credit markets help to reduce the anxious moods, hurting the markets of more risky assets. The US dollar remained under the downward pressure versus all major currencies, except for the Japanese yen, which decreased throughout fronts on the back of the Bank of Japan unplanned meeting.
Under these circumstances, the asylums lost their attraction and investors again started to sell the US dollar and buy the commodity goods, shares and assets of countries with developing economy.
In addition, the investors caution before the release of further details about Dubai situation and the publication of a key report on the US Change in Nonfarm Payrolls should not allow the dollar to fall significantly. Earlier on Tuesday, the more unpleasant, than expected, ISM Mfg business index could not significantly worsen the investors\' sentiments, so the Euro and other high – yielding currencies retained the earlier won positions. The PMI in November came to 53,6 compared to 55,7 in October, analysts were waiting this index appeared at the level of 55,0. Nevertheless, this index meaning in November was higher the key level of 50, which pointed to the activity growth in industrial sector. Although the dollar weakened versus the most major currencies, it slightly increased against the yen after the Bank of Japan unplanned meeting. Till the beginning of the trading session in New – York the dollar/yen pair reached the level of 87,54, after the Bank of Japan conducted the emergency meeting, but then it lost the most part of won positions because the Japanese central bank did not announce about special measures for the campaign against the yen upturn.
During its meeting the Bank of Japan left the interest rates at unchanged levels and decided to contribute nearly JPY 10 trln. within the frames of a new credit program, which was mainly perceived as a political motion, rather than a serious change in the central bank policy.
The central bank of Australia came the full circle of extremely calm monetary policy, enhancing its key interest rate by 0,25 percentage points to 3,75%. As the analysts were looking for this event, the Australian dollar had risen before the decision was announced, afterwards it lost a part of positions. Since that time, however, the Australian dollar strengthened its position versus the US dollar.
Meanwhile, it was reported in the Swiss National Bank, before the beginning of the trades in New – York, that they would continue to take drastic measures in order not to allow the frank to strengthen against the Euro. The Swiss National Bank Governing Board Chairman Roth said about this.
The Swiss National Bank declared about the strategy directed against the frank strengthening for the first time in spring this year in attempt to support export-orientated economy of Switzerland.
Since that time the Swiss National Bank, as it is expected, has conducted the interventions at the currency market for four times for the purpose of the frank weakening, though the central bank never confirmed the information about the total quantity of interventions.
Best regards,
Analyst: V. Donin.
