Market Update 10/09/2024

Welcome to our daily market update, where we help keep you informed on the latest happenings in the world of FX.
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Markets had a quiet start to the week, with no major data releases and the FOMC in blackout. Dip buyers returned to the US stock market, helping it recover from last week’s declines. Most stocks gained, with the S&P 500 rising around 1%. In Europe, the Euro Stoxx 50 closed up 0.9%, and the FTSE 100 increased by 1.1%. US Treasuries saw little change from last week’s close, with the 10-year yield down 1 bps to 3.70%.

The USD strengthened, with the dollar index trading near 101.55. US interest rates reflect growing market expectations of a 0.25% rate cut at the September Fed meeting, though there’s still a decent chance of 50 bps moves being priced in across the following three meetings.

Yesterday, China’s CPI came in at 0.6% y/y slightly below expectations, while the PPI was -1.8% compared to the expected -1.5%. This added to ongoing concerns about China’s economic outlook.

NZDUSD dropped from 0.6185 to a low of 0.6125 overnight before bouncing back to around 0.6150. Support seems to be around 0.6120-30, with resistance likely near 0.6165-70. 

NZDAUD has dipped to 0.9230 from yesterday’s highs. It might have overreached a bit, but the AUD seems more sensitive to weaker data from China and risk-off sentiment in the US. Significant downside in NZDAUD seems unlikely unless risk appetite improves. For today, support might be found around the 0.9200-0.9210 range.

NZDCAD is the largest mover, down 0.5% to 0.8335, with CAD being the only major currency to gain while the USD strengthened across the board.

NZDGBP upward momentum was stopped in the 0.4760s at the end of August, pulling back from the closely watched 100-day moving average. The pair is likely to find support around 0.4690, which is the 38.2% Fibonacci retracement of the July-August rally. With September typically being tough for risk-sensitive assets and the Bank of England in no rush after its August rate cut, it seems unlikely the late August high will be tested this month.

Today, NZ Q2 Manufacturing activity data will be released at 10:45 am, while not usually market moving, it may shape expectations for the upcoming GDP figures. In Australia, Consumer Confidence and Business Confidence data will be out at 12:30 pm and 1:00 pm. On the global front, the key release is UK labor market data, especially wages, which will influence expectations around potential BoE rate cuts.

 Here are the latest mid-market rates: