Market Update 19/11/2024

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 opened the week on a positive, with the S&P 500 gaining 0.5%, Tesla standing out as a top performer, rising 7%. Speculation suggests that Trump’s team aims to advance a new framework for regulating self-driving vehicles. In Europe, the Euro Stoxx 50 dipped 0.1%, while the FTSE 100 increased by 0.6%. US bond yields eased slightly, as the 10-year Treasury yield fell by 1.6 bps to 4.42%. Meanwhile, the US dollar index softened, and was down 0.3% to 106.30.

Overall, the USD broadly weakened as equities gained momentum, bond yields eased and market sentiment improved.

NZDUSD reached a new 2024 low of 0.5836 before rebounding to 0.5885, showing potential for a move toward 0.5900, though the overall outlook remains cautious. Fed Chair Powell has emphasized a cautious approach to easing, citing the strength of the US economy, which has dampened expectations for a December rate cut. Consistent messaging from policymakers could reinforce this stance, potentially driving yields higher and keeping the USD supported.

NZDAUD has edged lower to 0.9050. Next week’s RBNZ meeting could push the pair toward the boundaries of its recent range 0.9020 to 0.9120. Meanwhile, the RBA meeting minutes are due at 1:30 pm today. Although the information may not be new, markets often scrutinize such releases for subtle changes in language or tone that might signal a shift in outlook.

NZDJPY is performing well, supported by a rise in USDJPY yesterday. BOJ Governor Ueda’s speech echoed previous remarks, offering no clear signal of a potential rate hike in December. Over the past two months, NZDJPY has stayed within a narrow range of 90.00 to 92.00, and it’s currently trading right in the middle of that range once again.

NZDEUR has shown little movement, currently trading at 0.5562. On Monday, German central bank chief Joachim Nagel struck a hawkish tone during his speech in Tokyo. He highlighted that trade tensions could drive up inflation, necessitating higher interest rates. Nagel cautioned that reduced global integration would likely require the ECB to implement higher rates to maintain control over inflation.

The data calendar is relatively light this week, unfolding against the backdrop of Fed Chair Powell’s commitment to a “higher for longer” interest rate strategy and market speculation around potential Trump policies as he finalizes his cabinet appointments. Key events ahead include the RBA meeting minutes at 1:30 pm NZT, along with US housing starts and permits, and Canadian CPI data.

Here are the latest mid-market rates:

Chart of the day