Philip Salter
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ON WEDNESDAY, New Zealand’s central bank is expected to clarify its stance and could mention New Zealand dollar strength as a factor under consideration. Talk of intervention remains premature, but is definitely a possibility. Global growth concerns and a dovish central bank should cap extensive gains for the time being, but even a small factor would again entice fresh long positions. On sterling-New Zealand dollar Alpari quotes NZ$1.8803-NZ$1.8808.

Euro-dollar shot higher in the early hours of Tuesday night as President Obama failed to allay fears about the US. After adding some 160 pips to breach the $1.45 level, it stalled at long-term Fibonacci resistance at around $1.4520 and pulled back below $1.45. Look to sell on any rally back towards $1.4520. Spread Co quotes $1.44713-$1.44721.

The UK GDP data gave sterling a boost yesterday when many expected poorer figures. It indicated that the service sector, which makes up three quarters of the UK economy, was in better shape than expected. As a result it caused a sell off in euro-sterling back towards £0.8800. Capital Spreads quotes £0.8840-£0.8841. Sterling also rallied nearly 90 points against its US counterpart. Capital Spreads quotes sterling-dollar $1.6387-$1.6389.

The ongoing story of dollar weakness is unlikely to go away, even if the US debt ceiling is lifted quickly. As such, a safe haven play like the Swiss franc is going to remain popular. There are plenty who believe this trend isn’t going to halt any time soon. Current IG Index price on dollar-Swiss franc is SFr0.8016-SFr0.8018.