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 stocks strengthened as predictions of increased market volatility did not come true after the assassination attempt on Republican Presidential candidate Donald Trump. Investors may be focusing on the growing expectation that Trump will win the November election, bolstered by the prospect of upcoming interest rate cuts. The yield on the US 10-year Treasury rose by 4.7 bps to 4.23%.
The US Empire State Manufacturing Index shrank for the eighth consecutive month in July, reaching -6.6, while the prices received by producers dropped to a one-year low.
Overnight, Fed Chief Powell stated that last three inflation data have been reassuring, and the economy is doing well overall. He observed that the job market is stabilizing. Powell highlighted that because of the time it takes for monetary policy changes to affect the economy, the Fed can act pre-emptively before inflation hits the 2% target. Additionally, he clarified that he will not provide any indications about when interest rate cuts might occur, and while current monetary policy is tight, it is not overly restrictive.
Overall, the USD strengthened against all other G10 currencies in the past 24 hours.
NZD/USD has dropped nearly 0.3% since yesterday afternoon, falling back below 0.6080. The 200-day moving average at 0.6078 is at risk, and a break below this level could push the pair towards the 0.6000 mark. Recent movements have mainly been between the key Fibonacci levels of 0.6072 and 0.6142. The outlook for the NZD will likely depend on the Q2 CPI report due tomorrow. If the headline inflation rises by 0.4% q/q resulting in an annual rate of 3.3%, down from 4.0%, it would be below market expectations of 3.4% and the RBNZ’s May MPS forecast of 3.6%. This could weaken the NZD as expectations for RBNZ rate cuts would increase.
NZDAUD has fallen below 0.9000. In the past, it hasn’t stayed below this level for long. However, due to the differing expectations for interest rates, where the Reserve Bank of Australia (RBA) might raise rates and the Reserve Bank of New Zealand (RBNZ) might cut them, the market is expected to prefer the Australian dollar for its higher yield. Both currencies are considered risky and tied to commodities related to China.
NZDGBP has dropped below 0.4700, marking its lowest point since September at 0.4685. Tomorrow, the UK’s y/y Consumer Price Index (CPI) will be released, with forecasts expecting 1.9%, down from the previous 2.0%.
There are no local economic reports scheduled for today. The key international release will be the US retail sales data for June, expected just after midnight. Additionally, Canadian Consumer Price Index (CPI) data will be closely watched, with the market currently pricing in nearly an 80% probability of a 25 bps rate cut by the Bank of Canada next week
Here are the latest mid-market rates:
| Currency Pair | Mid-market rate |
| NZD/USD | 0.6074 |
| NZD/AUD | 0.8983 |
| NZD/JPY | 96.03 |
| NZD/CNY | 4.4188 |
| NZD/EUR | 0.5574 |
| NZD/GBP | 0.4683 |
| NZD/HKD | 4.7419 |
| NZD/SGD | 0.8162 |
NZD/USD 24 HOURS
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.
