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US stocks fell as the tech sell-off persisted. FOMC members suggested rate cuts are likely but need more evidence of slowing inflation. A dovish hold is expected at the July meeting, with the market anticipating the first cut in September. US yields edged up overnight, with the 10-year yield rising 4 bps to 4.20%.
US initial jobless claims increased to 243k in the week ending 13th July, compared to 223k the previous week and 239k during the survey week. While these figures can fluctuate, especially during times when the auto industry is undergoing seasonal adjustments, the overall trend points to a slowing labor market. Furthermore, Fed official Goolsbee mentioned that the Fed has already made substantial efforts to tighten monetary policy and emphasized the need for the slowing job market to stabilize instead of worsening.
The USD strengthened against the G10 currencies, partially recovering from the previous day’s decline.
NZDUSD has declined and is struggling to rebound even when the USD weakens. Following last night’s USD strength, it has fallen below 0.6050 and is targeting the post-CPI lows around 0.6035. Initial supports are at 0.6035 and then 0.6010-0.6000, with resistance around 0.6085-90, which seems unlikely to be reached this week. With NZ CPI now behind us, the NZ data calendar is light until the August RBNZ MPS, so offshore factors may drive moves until then. However, it’s hard to see sentiment towards the NZD turning positive soon.
NZDAUD stayed lower after stronger than expected Australian employment growth pushed it towards 0.9010. However, the AUD struggled overnight due to a risk-off move, which has slightly reversed the trend. There may be some consolidation in the 0.8950-0.9050 range as we await more data. If the trend of weaker NZ data compared to Australia continues, it seems likely that the RBA and RBNZ will follow different paths for a while, which could lead to a further downside in NZDAUD.
NZDJPY has recovered some of its earlier losses and is currently trading at 95.15. Meanwhile, USDJPY has rebounded above 157.00. We might see further volatility since the liquidity seems to be quite low.
NZDEUR has returned to 0.5550, with the Euro weakening further after the ECB meeting. The ECB kept rates steady and didn’t commit to a September rate change, despite markets still pricing in an 80% chance of a 25 bps cut in September. They emphasized that future interest rate decisions will be made on a meeting-by-meeting basis, influenced by incoming data, inflation forecasts, and the impact of monetary policy.
There is no domestic data scheduled for today. Attention will be on Japan’s consumer prices at 11:30 am, as the Bank of Japan meeting approaches next week. Retail sales figures from the UK and Canada will be released later this evening.
Here are the latest mid-market rates:
| Currency Pair | Mid-market rate |
| NZD/USD | 0.6046 |
| NZD/AUD | 0.9013 |
| NZD/JPY | 95.15 |
| NZD/CNY | 4.4002 |
| NZD/EUR | 0.5548 |
| NZD/GBP | 0.4670 |
| NZD/HKD | 4.7219 |
| NZD/SGD | 0.8122 |
NZD/USD 24 HOURS
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