Earnings Season prepares return to risk

11.08 NZST, Wednesday 30 January 2013

Earnings Season prepares return to risk
By Andrew May (Sales Trader, CMC Markets New Zealand)

With the fourth quarter US earnings season in full swing pushing markets to historic highs not seen since 2007, commodities and growth currencies are witnessing ignition for a short to medium sustained break out

Early this week the Kiwi slid into free fall after a milk contamination scare for Fonterra saw milk powder sales plummet, and ensured the Kiwi US cross fell 50pts from Monday's open to 0.8310.

However, strong risk appetite gained momentum as traders departed treasuries and transitioned into the fast paced equities market. The NZD regained lost composure to currently tread support at 0.8365 with a view to pushing last year’s 0.8459 highs.

Boosted by yesterday's December trade surplus, the Kiwi has opened today at 0.8370. It’s also sitting comfortably at AUD 0.80 and has earmarked YEN 76.00 with a view to pushing to 76.50 highs. The only notable retraction is against the Euro to where it’s retested 0.62 from 0.6450 highs three weeks ago.

As long as the FOMC meeting early tomorrow morning doesn't rock the boat with further debt ceiling commitment talks and the RBNZ official cash rate keeps the status quo we should see the DOW hit the 14,000 mark comfortably thus taking the majority of Kiwi cross rates up in its wake.

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