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US bond yields began the week higher as traders evaluated the increasing chances of a Trump presidency following the weekend’s presidential debate. The yield on the US 10-year bond rose by 8 basis points to 4.48%. This rise in US bond yields is drawing significant attention, boosting the USD DXY while most other currencies declined. Overnight the US ISM Manufacturing index dropped by 0.2 points to 48.5 in June. Among the components, production and employment moved into the contraction zone. While new orders improved from May, they remained weak overall. Inventories decreased, prices increased but at a slower rate, and both imports and exports declined.
NZDUSD traded within a narrow 10-point range yesterday 0.6094-0.6102 but is now testing support at 0.6065 due to higher US yields and a stronger dollar. The 100 and 200-day moving averages are near 0.6070 level along with cloud support. On the upside, recent rallies have been limited to 0.6105-0.6110, suggesting that resistance is becoming solid in that area.
NZDAUD is slightly weak, currently trading at 0.9118. The RBA minutes, released today at 1:30 pm NZT, could introduce some volatility and potentially push NZD/AUD lower if they reveal a more hawkish stance.
NZDJPY defying the trend, the yen is weakening faster than the NZD. USD/JPY reached a new high last night at 161.73, so we are closely monitoring the Bank of Japan and other officials for any comments or potential intervention.
NZDEUR continued to lag. European CPI is set to be released tonight at 9:00 pm NZT and is expected to decrease to 2.5% from 2.6% last month. Recent regional data, including Germany’s report last night, have mostly matched consensus expectations.
On today’s economic calendar, we have the RBA minutes at 1:30 pm NZT, followed by the European CPI release at 9:00 pm NZT. The US JOLTS data will be out at 2:00 am NZT. Additionally, we can expect further commentary from global policymakers attending the ECB’s annual central banking forum in Sintra.
Here are the latest mid-market rates:
| Currency Pair | Mid-market rate |
| NZD/USD | 0.6070 |
| NZD/AUD | 0.9115 |
| NZD/JPY | 98.03 |
| NZD/CNY | 4.4344 |
| NZD/EUR | 0.5652 |
| NZD/GBP | 0.4798 |
| NZD/HKD | 4.7420 |
| NZD/SGD | 0.8240 |
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