Market Update 18/10/2024

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

Equities hit a new record today following solid US retail sales figures and lower-than-expected jobless claims, reinforcing the outlook for a “soft landing.” The S&P 500 rose 0.3%, while the Euro Stoxx 50 and FTSE 100 gained 0.8% and 0.7%, respectively. The yield on the US 10-year Treasury increased by 8 bps to 4.10%.
 
US retail sales saw stronger-than-expected growth in September, showing robust consumer spending that continues to drive the economy. This follows earlier reports of strong job growth and higher-than-expected inflation, further indicating that the economy is far from a recession. According to the Commerce Department, retail sales rose 0.4% in value, unadjusted for inflation, after a 0.1% increase in August. Sales, excluding autos and gas stations, increased by 0.7%.
 
Secondary data showed mixed results. Initial jobless claims unexpectedly dropped by 19k to 241k last week, though this was influenced by two hurricanes and the Boeing strike. Similarly, industrial production declined by 0.3% in September, with downward revisions. Meanwhile, the Philly Fed business outlook and the NAHB housing market index came in slightly stronger than anticipated.
 
NZDUSD has remained stable despite the ongoing rise in the US dollar index, hovering around 0.6060 for the past 24 hours. October’s weakness for the NZD persists, though it has eased over the last week, with a trading range of 0.6040 to 0.6120. Overnight, the pair stayed within this range, sitting just above 0.6055 this morning and fluctuating near the downtrend line from February 2021. This line, which turned from resistance to support in September, is now acting as resistance again, positioned around 0.6090, just below the 50% retracement level at 0.6115 for the August-September range. Short-term, the upside seems limited near 0.6100.
 
NZDAUD is on the back foot to 0.905 as the AUD has been the strongest major currency over the past 24 hours. This follows the stronger-than-expected Australian labour market report, which showed a solid 64k increase in employment and higher participation, keeping the unemployment rate steady at a revised 4.1%. As a result, the market scaled back expectations for rate cuts, pushing interest rates higher and supporting the AUD. Whereas, market pricing is looking for a 50bps RBNZ cut next month.
 
NZDJPY has climbed back above 91.00 with USDJPY breaking above 150.00, there’s renewed concern about potential intervention from Japan, which is something to keep an eye on.
 
NZDEUR has risen back above 0.5600. The European Central Bank (ECB) reduced interest rates for the 3rd time this year, as the faster decline in inflation allows it to support the region’s slowing economy. The key deposit rate was lowered to 3.25%. The ECB mentioned that controlling inflation should be achieved “by next year,” slightly adjusting its previous statement that this goal would only be reached in the second half of 2025. The euro weakened as traders increased bets on a large rate cut in December after policymakers highlighted growth risks.
 
Today’s economic calendar features Japan’s CPI release at 12:30 pm, followed by China’s activity data, including Q3 GDP, at 3:00 pm.

 Here are the latest mid-market rates:

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