Market Update 05/09/2024

Welcome to our daily market update, where we help keep you informed on the latest happenings in the world of FX.
If you have any questions or would like anything further explained, please don’t hesitate to reach out to your account manager or email info@cafx.com

Global equities were mostly lower, with the S&P 500 down 0.4%. The Euro Stoxx 50 and FTSE 100 ended the day down 1.3% and 0.3%, respectively. The US yield curve briefly reverted to a positive 2-year to 10-year spread, but it has since flattened again, and the yield on the US 10-year Treasury fell by 5 bps to 3.76%. 

Expectations for a Fed rate cut grew as US data showed a continued slowdown in the labor market. The JOLTS report showed job openings in July fell to 7.67 million, the lowest since early 2021, down from a revised 7.91 million in June and below expectations. Layoffs increased, reflecting weaker demand for workers. The ratio of job vacancies to unemployed workers, a key Fed metric, dropped to 1.1, the lowest in three years, down from its 2022 peak of 2 to 1. The quits rate, which tracks voluntary job departures, slightly increased to 2.1%, still close to the lowest levels since 2020, indicating reduced confidence in finding new jobs.

Out of Canada, The Bank of Canada reduced interest rates by 0.25% for the third consecutive meeting and emphasized that further easing is likely if inflation continues to slow. The CAD (Loonie) gained strength against the USD, but it didn’t leave any lasting effect to the CAD and is consistent with the movement of other G10 currencies.

NZDUSD briefly climbed above 0.6210 following the JOLTs data but has since pulled back. In the near term, resistance is seen around 0.6229, with 0.6300 as a more ambitious target. On the downside, support levels are at 0.6170, 0.6140, and near the 200-day moving average at 0.6100.

NZDAUD moved back above 0.9200 after the Australian GDP data. However, the pair has yet to clearly break through the mid-point of the February-July decline and the 200-day moving average, both around 0.9210-0.9220. A move above this level and the 29^th August high near 0.9260 would signal a strong bullish trend for the pair.

NZDJPY has dropped to 89.20, with the yen leading gains over the past day as the US dollar weakened.

No domestic data is scheduled for release today, but it’s worth noting that RBA Governor Bullock will be speaking at 2:00 pm. Later in the evening, there are three important US data releases: ADP non-farm employment change, unemployment claims, and ISM Services PMI, all coming out between midnight and 2:00 am.

 
Here are the latest mid-market rates: