Market Update 07/06/2024

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

Equity markets surged as the ECB reduced its key policy rates by 25bps and indicated more cuts might come if inflation improves. However, gains lessened late in the US session as attention shifted to the upcoming US non-farm payrolls report. The yield on the US 10-year increased 1bps to 4.29%. US Jobless Claims were slightly higher than expected at 229k compared to the forecast of 220k, suggesting an upward trend. In contrast, non-farm productivity growth for Q1 was 0.2% q/q, surpassing the expected 0.0%. Unit labor cost also came in lower than expected at 4% seasonally adjusted annual rate. Overall, this data suggests a cooling lobor market ahead of tonight’s key non-farm payrolls report, where a 180k increase in jobs is anticipated.
 
NZDUSD hit a new 3-month high of 0.6215 yesterday, nearing levels seen in February and March, making this as a key resistance point we’ve previously identified. A break above the February peak of 0.6218, it could lead to increased buying activity, it may drive the rate up to around 0.6240. But this upward momentum would likely require positive data from the upcoming release to support it. The pair has currently settled around 0.6200. Movements in NZD cross rates have been minimal as markets position for tonight’s Non-Farm Payroll data and next week’s Fed meeting.
 
NZDAUD trading at similar levels as yesterday. AUD currency holiday on Monday (King’s Birthday). AUD led the G10 currencies in strengthening against the USD yesterday, despite weak GDP numbers on Wednesday. This was supported by recent swings from RBA Governor Bullock and her deputy about the need to remain vigilant on inflation.
 
NZDEUR reached a new 4-month high to 0.5700 before retracting to 0.5670 during the announcement and press conference as ECB noted a significant improvement in the inflation outlook, stating they would maintain policy rates at sufficiently restrictive levels for as long as needed, following an upward revision of price projections. By the end of US trading, it settled around 0.5690. The short to medium-term outlook remains bullish for NZDEUR, raising anticipation for a significant challenge of the 0.5730 resistance level.
 
In the day ahead, China’s trade data will be released, but the primary focus will be on the US employment report tonight at 12:30am NZT. Market expectations include a 185k increase in non-farm payrolls, an unchanged unemployment rate of 3.9%, and steady average hourly earnings at 3.9%y/y.


 Here are the latest mid-market rates:
 

Disclaimer:

The market update provided by Corporate Alliance FX (CAFX) is for reference only and does not constitute a bid, levy, offer or invitation to offer for the financial product, the basis for any contract or commitment, a recommendation for the purchase or sale of any investment instruments, financial, legal, tax, investment advice, investment advice or other opinions. It will not be legally liable for any consequences or losses caused by the information or content involved. 
Corporate Alliance Group Pty Ltd T/A Corporate Alliance FX (CAFX) (ABN 58 167 119 226, AFSL 523351) (i.e. CAFX), CAFX independently holds the Australian Financial Services licence no. 523351 (AFSL), so CAFX is regulated by the Australian Securities and Investment Commission (ASIC) and, and although ASIC is a strictly regulatory body, it does not endorse a specific financial product. ASIC’s regulation of CAFX applies to all services under the financial licence held by CAFX, including the issuance of foreign exchange settlement, foreign exchange payments, foreign exchange risk control, hedging, market making and providing financial advice.