Market Update 23/07/2024

Welcome to our daily market update, where we help keep you informed on the latest happenings in the world of FX.
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Stock markets rallied after President Biden announced he wouldn’t run in the November presidential election, causing the odds of a Trump victory to slightly increase. The rally in US equities was led by tech stocks, and the yield on the US 10-year note rose 1.6 bps to 4.25%. The US Chicago Fed National Activity Index indicated a decline in economic activity for June, dropping to 0.05 from 0.23 in May.
 
The People’s Bank of China cut a key short-term policy rate for the first time in nearly a year, lowering the seven-day reverse repo rate by 10 bps to 1.7%. This move aims to bolster the economy after disappointing growth and marks a shift toward a new policy benchmark. Following this, Chinese banks also reduced their main benchmark lending rates by 10 bps.
 
Overall, the USD is stronger against the Trans-Tasman currencies.
 
NZDUSD has fallen below the 0.6000 level, which has raised concerns about the NZD’s performance. Historically, the NZD has only dropped into the fifty-cent range during four periods in the last decade, with the lowest points being around 0.5500 cents in the 2022/23 declines. Recently, the currency has found support at 0.5775 and 0.5870, which are higher lows. If the NZD continues to weaken, the key Fibonacci level of 0.5915 should be monitored for potential breaks. Today, with little economic data expected, the NZDUSD is likely to trade within a range. The 0.6000 level will be difficult to surpass on the upside, while a drop to 0.5950 is considered less likely on the downside.
 
NZDAUD has risen slightly, returning to 0.9000. Below this level, 0.8950 is a key support level for the pair.
 
NZDJPY is at 93.85, while USD/JPY is down 0.2% to just above 157 after hitting a low of 156.30 overnight.
 
NZDGBP is testing new 7-year lows around 0.4620, after forming a double top near 0.4850 in June. The pair has since dropped over 4.5%, with July set to record the largest month-on-month decline in nearly two years.
 
NZDEUR has decreased by over 4.5% since its high near 0.5750 on 13^th June. It dropped below 0.5500 recently, marking its lowest level since November. The key support level is noted to be around 0.5480, based on previous lows from October and November.
ECB’s Kazmir commented that while market expectations for two more rate cuts by the ECB are not completely dismissed, they are not certain either. He agreed with his Irish counterpart Makhlouf’s view that there’s no urgency to make decisions now. Kazmir suggested using the quieter summer period to prepare for the upcoming “health check” in September, which will involve new data and forecasts guiding any necessary policy decisions.
 
Locally, there’s nothing significant happening today. Within our trading hours, the market will see Singapore’s inflation figures at 5:00 pm and Japan’s Machine Tool Orders at 6:00 pm, but these are unlikely to have much impact on the NZD.
 
Later in the evening, key data points to watch include Eurozone consumer confidence, US Existing Home Sales, and the Richmond Manufacturing Index, which might attract market attention. Additionally, the FOMC is in a blackout period until August 2, so there won’t be any Fed-related news until then


Here are the latest mid-market rates:

NZD/USD 24 HOURS 

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