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The effects of the Fed’s decision continued to be felt overnight causing a global pullback in equities. US PPI data came in much lower than expected, and jobless claims rose further, which supported the US 10-year Treasury yield and led to a 7.4bps drop to 4.24%. Yields have returned to or below pre-FOMC levels, which were see as more hawkish than anticipated. Typically, lower bond yields would weaken USD, but this effect is being overshadowed by weakness in the EUR due to widening French bond spreads compared to German bunds.
NZDUSD is flat around 0.6170 despite the weaker US data and pair could remain in its familiar range between 0.6100-0.6200, which has dominated since mid-May. Although it briefly rose above 0.6200 twice in June, better resistance for importers is around 0.6220. Many are hoping to regain 0.6200 and confirm the April-June uptrend. Exporters are likely well covered at 0.6100, given the frequent tests at that level last month, but may still look to add more, especially during the slower winter season for food exports. If the NZD dips below 0.6100, stronger support is found around 0.6050-70, where the 100 and 200-day moving averages converge.
NZDAUD is just below 0.9300. Australia’s labor market met market expectations with the unemployment rate dropping back to 4.0%, aligning with the RBA’s Q2 projection. Resistance is still around 0.9300-20, with initial support sitting at 0.9250-60, and potentially at 0.9220 afterward.
NZDJPY hit a new 17-year high of 97.20 before a shift to safety brought it back below 97.00. It is currently trading at 96.80, with USDJPY at 157.00.
NZDEUR climbed to 0.5750, its highest level since early January due to political uncertainty in Europe. EURUSD dropped 0.6% to 1.0740, pulling down other European currencies except for the CHF.
Today’s calendar includes several NZ data releases, such as REINZ housing market data, the manufacturing PMI and monthly pricing indicators that will help refine Q2 CPI estimates. There’s nothing scheduled for Australia. The BOJ’s policy announcement will be released later this afternoon. Tonight, we’ll see French and Swiss CPI data, followed by the University of Michigan and import/export prices in the US.
Here are the latest mid-market rates:
| Currency Pair | Mid-market rate |
| NZD/USD | 0.6161 |
| NZD/AUD | 0.9287 |
| NZD/JPY | 96.84 |
| NZD/CNY | 4.4806 |
| NZD/EUR | 0.5738 |
| NZD/GBP | 0.4829 |
| NZD/HKD | 4.8129 |
| NZD/SGD | 0.8325 |
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