Market Update 21/06/2024

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Equities had a mixed session, the S&P initially rose above 5,500 but retraced gains as tech stocks pulled back slightly. The dollar remained strong, and bonds were cautious, with the US 10-year yield increasing by 2.7bps to 4.25%. Initial jobless claims for the non-farm payroll survey week were 238k compared to 216k in the May survey week, suggesting a weaker labor market report for June as demand for labour cools. Additionally, the June Philadelphia Fed business outlook index dropped to 1.3 from 4.5 in May, missing expectations of 5.0. Despite the headline index reaching its lowest level since January, some subcomponents showed better performance than the overall index.
 
NZDUSD rallied 0.3% to 0.6145 immediately after better-than-expected GDP data was released yesterday but quickly returned to pre-data levels. While a stronger Kiwi is plausible due to reduced odds of an early rate cut from the RBNZ, concerns about potential economic fallout in the coming months remain. Overnight, the Kiwi lost more ground, with the Swiss Franc leading losses as the Swiss National Bank cut its policy rate down 25bps to 1.25% and broad USD strength continued, supported by higher US yields. Currently, NZDUSD has important daily support around 0.6085-0.6100. To counter persistent downside risks, a close above the 0.6217-0.6222 triple top from February, March, and June would be needed, which could set the stage for a push to December 2023 highs above 0.6300.
 
NZDAUD has remained mostly below 0.9200 over the past 24hours, showing little movement following the NZ GDP figures. While AUDUSD has slightly declined to 0.6660 amid broad USD strength, it hasn’t performed too badly overall, showing gains against the EUR, GBP and JPY.
 
NZD/JPY reached a new 17-year high of 97.30, driven by strong USD performance and higher global interest rates. USDJPY increased by 0.4% to 158.91, the highest since April 29, marking its sixth consecutive day of gains, the longest winning streak in 3 months. The yen is approaching 34-year lows, heightening the risk of Japanese intervention to support the currency.
 
NZDGBP rallied slightly to 0.4835 post BoE news. Whereas GBPUSD is trading at 1.2657, showing a slight decrease in value. Despite the BoE releasing a dovish update, this hasn’t significantly affected the pound’s value. Additionally, the pound has only slightly weakened against the EUR, and the currency’s overall performance remains relatively stable

 Here are the latest mid-market rates:

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