The New Zealand dollar is seen to benefit from risk-on trades today as optimism over holiday sales in the US and a Greek aid package is deemed to buoy market sentiment. Amid encouraging signs that the US holiday shopping season was off to a positive start, US stocks posted their biggest weekly rally in five months last week. Meanwhile, a meeting today by Euro Zone finance ministers is presumed to produce an agreement to clear and aid payment for Greece and forge a blueprint to keep the country a solvent member of the Euro region.
Last Black Friday, the Dow Jones Industrial Average advanced 1.35 percent to cap off a weekly gain of 3.3 percent, its largest incline since the week ended June 8. The Standard & Poor’s 500-stock index rose 1.30 percent last Friday to culminate a week which saw it jump by 3.6 percent. Helping lift market moods was a comment by Wal-Mart Stores Inc. calling Black Friday its “best ever,” suggesting that the US economy is seen to receive a boost from robust holiday spending. Likewise, research firm comScore reported that online sales soared 26 percent on Black Friday to $1.04 Billion from sales of $816 Million last year, the first time ever online retail sales topped $1 Billion mark. Optimism is seen to continue today as comScore also expects positive numbers for today, Cyber Monday, traditionally the largest e-commerce day in the US in recent years. Americans are expected to spend $1.5 Billion, up 20 percent from last year.
Also today, finance chiefs from the Euro bloc convent and make another attempt to settle their difference over debt relief measures for Athens and provide a green light to disburse up to 44 Billion Euros worth of needed aid. Measures are needed to be laid out to cut Greece’s debt pile from a projected 189 percent of Gross Domestic Product in 2013 to around 120 percent in 2020. Roadblocks to a deal include disagreements over the plan to reduce interest rates, opposition by some members to returning profits from the European Central Bank’s purchases of Greek bonds, and a gloomy assessment of Greece’s growth prospects until 2020 by the IMF. Nevertheless, the markets are likely to cling to comments by German Chancellor Angela Merkel, French Finance Minister Pierre Moscovici and Greek officials which render optimism that the Euro Zone is very close to reaching an agreement on Greek debt. Considering these factors poised to improve sentiment, a long position favoring the New Zealand dollar is advisable today.
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