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US stocks saw a slight increase as the tech sector rebounded. Attention is now on this week’s US CPI and FOMC decision, scheduled for Thursday morning. The US 10-year yield rose 4bps to 4.47%. Increased political uncertainty in Europe, due to the snap parliamentary election in France negatively affected the European stocks. The USD had mixed results – AUD, NZD & GBP gained in the last 24 hours, while the EUR & JPY declined.
NZDUSD has modestly recovered after Friday’s significant loss. The NZD found some support at 0.6100 yesterday afternoon and has pushed up overnight to as high as 0.6130. If the Fed/US inflation numbers suggest an earlier cut, this could be positive for the NZD due to yield differentials. If FOMC adjusts its dot plots from the anticipated three cuts to one or two cuts for this year, with a slight increase in the end of 2024 inflation forecasts. This aligns broadly with market expectations, possibly even slightly more if there are two cuts for the year. Therefore, two cuts would be positive for NZD, while only one cut would be negative.
AUDUSD has also recovered and is just above 0.6600. NZDAUD is worth monitoring as it appears to be in a short-term downtrend. Considering the appreciation since early May, which seems inconsistent with fundamentals except for interest rate spreads, it might be starting to reverse its May-June rise.
NZDEUR has risen 0.8% to 0.5690, with recent price movements indicating resistance around the 0.5700 level. EUR initially weakened after the French President Macron called a snap election following his party’s poor performance in the EU parliamentary elections, where the right-wing National Rally (RN) party won in France. This election has raised concerns about the future EU cohesion on issues like fiscal, immigrations and climate policies if National Rally win the election on June 30th and July 7th.
On the economic calendar, Australian NAB Business Confidence will be released at 1:30pm NZT. UK Labor market data will be available in the early evening at 6:00pm, kicking off a very quiet evening for data. Main focus in on Wednesday night/Thursday morning US CPI & FOMC statement
Here are the latest mid-market rates:
| Currency Pair | Mid-market rate |
| NZD/USD | 0.6129 |
| NZD/AUD | 0.9273 |
| NZD/JPY | 96.28 |
| NZD/CNY | 4.4538 |
| NZD/EUR | 0.5694 |
| NZD/GBP | 0.4815 |
| NZD/HKD | 4.7890 |
| NZD/SGD | 0.8289 |
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