The NZD/USD is once again paying for the US’s sins with a collapse in the USD propelling the NZD/USD to fresh 5-month highs above 0.8520 overnight. As we noted yesterday, while the US has temporarily patched up its fiscal issues, lasting damage has been done to the USD. Not only will US Congress be doing it all again in February/March, but the resulting uncertainty could delay Fed tapering until well I nto 2014. The market has already moved to reflect this risk with 10-year US bond yields losing 15bps over the past two days.
Read the full report: FX Daily
BNZ