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Market Update 15/10/2024

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

US equities continued to rise, despite lower trading volumes due to the Columbus Day holiday. The S&P 500 gained 0.7%, with most sectors showing positive performance. In Europe, the Euro Stoxx 50 increased by 0.7%, while the FTSE 100 rose 0.5%. The US Treasury market remained closed for the holiday.
 
Minneapolis Federal Reserve President Neel Kashkari said that “further modest reductions” will likely be necessary in the coming quarters to meet the Fed’s goals, while emphasizing that future decisions will be guided by data. He also pointed out that it’s uncertain how restrictive current policy is due to the unclear level of the neutral rate, a key challenge for central banks aiming to steer policy toward more neutral territory.
 
There are signs that the “Trump trade” is gaining momentum again, with the USD rising 0.4%, in line with that trend. In US equities, Goldman Sachs’ stock baskets, which track those benefiting from Republican or Democrat leadership, show recent outperformance for stocks tied to Republican gains. Public polls and betting markets have also shown a shift in momentum toward Trump.
 
NZDUSD is currently hovering around 0.6090, after briefly touching a low of 0.6070 overnight. The NZD managed to hold near key support levels, but remains sensitive to interest rate expectations. A lot will depend on tomorrow’s CPI data, and it’s likely we’ll see tight range trading until then. Key support levels are at 0.6085, 0.6058 and 0.6000, while resistance is at 0.6120, 0.6170 and 0.6220.
 
NZDAUD remains near the lower end of its long-term range, with the 0.9000 level still at risk due to interest rate expectations. However, in the long run, this cross is likely to be influenced more by developments in China. Key support is at 0.9025 and 0.9000, while resistance sits at 0.9070 and 0.9105.
 
NZDGBP has formed a double top around 0.4760, seen at the August and September highs, and has since pulled back to just above 0.4630 over the past two weeks. The pair is showing signs of a potential base, briefly moving above 0.4680 late last week before easing back to the mid-0.4600 range in yesterday’s session. UK Prime Minister Keir Starmer dismissed the idea that the government was contemplating raising capital gains tax to 39%. Speaking to Bloomberg Television, Starmer said, “A lot of the speculation is quite off the mark,” in response to a Guardian report suggesting that Reeves might increase the tax from the current top rate of 28% to 39%.
 
No significant local economic data is expected today. However, key UK labour market data and Canadian CPI will be released later this evening. In the US, the data calendar is light, with the Empire State Manufacturing Index being the highlight. Additionally, US earnings reports for Goldman Sachs, Bank of America and Citigroup are due overnight, along with comments from Fed officials Mary Daly and Adriana Kugler.

 

 Here are the latest mid-market rates:

Currency Pair Mid-market rate
NZD/USD 0.6092
NZD/AUD 0.9063
NZD/JPY 91.27
NZD/CNY 4.3227
NZD/EUR 0.5586
NZD/GBP 0.4666
NZD/HKD 4.7291
NZD/SGD 0.7977

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