Market Update 21/11/2024

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

Equity markets had a subdued performance, with the U.S. S&P 500 declining by 0.6%. In Europe, the Euro Stoxx 50 and FTSE 100 indices ended the day lower by 0.5% and 0.2%. Meanwhile, in bond markets, the yield on the U.S. 10-year Treasury rose by 1 bps from yesterday, reaching 4.41%.

Early this morning, FOMC member Lisa Cook suggested that the Fed should gradually lower interest rates over time, with the timing depending on economic data. Meanwhile, Fed Governor Michelle Bowman expressed a preference for a cautious approach to rate cuts, citing slower progress in reducing inflation.

USD is broadly stronger overnight.

NZDUSD has underperformed, dropping 0.5% to 0.5872. Inflation concerns remain a key market focus, particularly after Trump’s victory. This is reflected in US rate expectations, which now factor in only 75 basis points of cuts over the next 12 months, compared to New Zealand’s 138 basis points. Despite a recent correction, the USD remains significantly overbought. A confirmed break above 0.5925 could spark discussions about a move toward 0.6000, while a drop back to 0.5850 would shift attention to the longer-term trend level at 0.5830. Support levels sit at 0.5875, 0.5850 & 0.5830 while Resistance sits at 0.5925, 0.5967 & 0.6000.

NZDAUD has edged lower to 0.9032, staying within a broad range of 0.9030 to 0.9080. In the short term, the pair is likely to remain around these levels. However, if seasonal trends come into play, the AUD could strengthen toward the end of the year due to rate differentials, potentially putting the 0.9000 support level under pressure as Christmas approaches.

NZDEUR is steady at 0.5580, sitting in a balanced “Goldilocks” zone—neither overbought nor oversold in the short term. However, given Europe’s current political challenges and its similarly constrained economic position, the next move for this pair is likely upward, with a medium-term target of 0.5700. That said, there’s still some ground to cover before reaching that level. Support levels sit at 0.5535, 0.5505 & 0.5440 while Resistance sit at 0.5580, 0.5610 & 0.5650.

Looking ahead, RBA Governor Bullock is scheduled to speak tonight. The economic calendar features mostly second-tier data, including U.S. initial jobless claims, the Philly Fed business survey, and existing home sales.

Here are the latest mid-market rates:

Chart of the day