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Equities dropped overnight due to concerns about a US proposal to tighten trade restrictions on advanced semiconductor technology sales to China. Tech stocks like Nvidia, which have been driving the equity rally this year experienced significant declines. The yield on the US 10-year fell by 2bp to 4.15%.
US industrial production increased by 0.6% in June, exceeding the expected 0.3% rise. This was partly due to a significant increase in the volatile autos category. Even without this factor, manufacturing still rose by 0.3%. However, low manufacturing survey results suggest that activity may weaken in the future.
Overnight, Fed officials Waller and Williams mentioned that rate cuts will soon be appropriate due to improved inflation data and signs of the labor market cooling.
The USD weakened against most of its G10 peers. The DXY (dollar index) dropped below the 104.00 support level, marking its lowest point since March.
NZDUSD rise stopped just before reaching 0.6100 and has since gone down. After the release of the CPI data yesterday as annual headline CPI for Q2 dropped to 3.3% from 4% in Q1. This was slightly below the consensus estimate of 3.4% and better than the RBNZ’s forecast of 3.6% in the May Monetary Policy Statement. The NZD first fell but then rebounded because the data was somewhat surprising. The small gain lasted through the night, but the rate couldn’t surpass 0.6100. Currently, it’s trading close to important technical level of 200-day moving average and a key Fibonacci level at 0.6072 below.
NZDAUD remained stable, fluctuating around 0.9030. Today’s focus is on Australian labor market data at 1:30pm, if the data shows continued strength, the AUD is expected to rise, pulling the NZD up slightly as well. This could bring the 0.9000 level for NZDAUD back into consideration.
NZDJPY has returned to 95.00 after trading above 99.00 just a week ago.
NZDGBP is still below 0.4700, currently at 0.4672. UK Consumer Price Index (CPI) came in slightly higher than anticipated. Overall inflation remained stable at an annual rate of 2.0%, whereas forecasts suggested a slight decline to 1.9%. Core inflation also exceeded expectations by 0.1, reaching 3.5%. As a result, the market adjusted the likelihood of a 0.25 percentage point interest rate cut by the Bank of England at its August meeting down to approximately 35%.
Today, there are no significant domestic economic releases scheduled. Attention will instead shift to Australia’s June labor market data during the day. In the evening, the focus will turn to the UK unemployment figures at 6:00 pm. Shortly after midnight, the European Union will announce its main refinancing rate, which is expected to remain unchanged at 4.25%. The accompanying monetary policy statement and subsequent press conference, scheduled 30 minutes later, will be closely watched for indications regarding future policy timing. Additionally, during this period, the market will also anticipate US unemployment claims and the Philly Fed Manufacturing Index.
Here are the latest mid-market rates:
| Currency Pair | Mid-market rate |
| NZD/USD | 0.6077 |
| NZD/AUD | 0.9028 |
| NZD/JPY | 94.97 |
| NZD/CNY | 4.4208 |
| NZD/EUR | 0.5558 |
| NZD/GBP | 0.4672 |
| NZD/HKD | 4.7473 |
| NZD/SGD | 0.8153 |
NZD/USD 24 HOURS
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