Market Update 22/11/2024

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 gained globally, the S&P 500 was up by 0.6%. In Europe, the Euro Stoxx 50 and FTSE 100 ended the session with increases of 0.6% and 0.8%. U.S. bond yields remained relatively steady, the yield on the U.S. 10-year bond inched up by 1 bp to 4.42%. Oil prices climbed amid geopolitical tensions following reports of Russia launching an ICBM at Ukraine.

The Philadelphia Fed manufacturing index fell sharply to -5.5 in November, reflecting weaker activity across shipments, new orders, and prices paid, as high interest rates continue to weigh on the sector.

Weekly initial jobless claims decreased by 6,000 to 213,000 for the week ending 16^th November. However, continuing claims rose by 36,000 to 1.908 million, suggesting that while U.S. firms are not increasing layoffs, they are also not ramping up hiring, as unemployed individuals are taking longer to secure new jobs.

Fed speakers continue a cautious approach to future rate cuts, with decisions becoming increasingly dependent on upcoming economic data. Key reports on the labor market, PCE and CPI inflation in the coming weeks will play a crucial role in determining whether the FOMC chooses to pause or implement a 25bps rate cut at its final policy meeting of the year on 17–18 December.

NZDUSD remains below 0.5900, currently trading near 0.5860 this morning. The NZD has been weighed down by Treasury’s update yesterday, revealing that New Zealand’s economic slowdown has been more severe than expected, impacting tax revenues and limiting the government’s ability to reduce its budget deficit. Key support lies in the 0.5830-40 range, with a potential move toward 0.5785 if breached. On the upside, any rallies are likely to face resistance around 0.5900-10, as seen yesterday when the pair struggled to sustain levels above 0.5880.

NZDAUD dipped below 0.9000 for the first time since late July, with expectations of a 50bps rate cut by the RBNZ next week paving the way for further declines. The next downside target is the July low of 0.8950, though the pair previously found support around 0.8975 before rebounding into the 0.9000 range. A sustained break below 0.8950 could signal a more significant move from a long-term perspective.

NZDJPY edged down to 90.50 as JPY strengthened on safe-haven demand following heightened Ukraine-Russia tensions. Markets now turn their focus to the Bank of Japan’s upcoming policy decision next month.

NZDEUR has inched up to 0.5598, with the euro underperforming among G10 currencies due to heightened Ukraine-Russia tensions.

The economic calendar picks up pace, starting with Japan’s CPI data at 12:30 pm and PMI’s at 1:30 pm, followed by European and US PMI releases later tonight.

Here are the latest mid-market rates:

Chart of the day