Market Update 23/10/2024

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 recovered earlier losses as bond markets stabilized after a selloff, driven by expectations of a slower pace of rate cuts from the Fed. A 25bp rate cut is now more widely anticipated over a 50bps. The S&P 500 ended slightly lower, down 0.1%, while the Euro Stoxx 50 remained flat, and the FTSE 100 slipped by 0.1%. Meanwhile, the yield on the US 10-year Treasury held steady at 4.20%.

The USD has seen minimal movement against major currencies. The dollar index stays above 104, its highest level since early August, bolstered by reduced expectations of Fed rate cuts over the past month.

NZDUSD has rebounded from a 2-month low near 0.6020, reached in the local session yesterday, but price action was subdued overnight. For now, the focus seems to be on the US dollar, driven by factors like US earnings, the election, and the upcoming Fed meeting. In terms of levels, the 200-day moving average at 0.6092 is likely to cap near-term gains, with resistance around 0.6052. On the downside, markets might eye 0.6000, with 0.5975 as a key Fibonacci level below that.

NZDAUD is steady at 0.9045, as the AUD leads gains among the G10 currencies. Rising Australian yields and gains in Chinese equities supported demand from exporters. This follows balanced comments from the RBA earlier in the week, with less monetary policy easing expected in Australia compared to other regions.

NZDEUR briefly rose above 0.5600 yesterday as ECB policymakers reiterated that the pace of future rate cuts will depend on upcoming data, following last week’s cut. President Lagarde mentioned that wage pressures are easing, indicating further disinflation in the services sector, and she expects the inflation target to be reached by 2025.

There’s no significant local data today, with the next key update being the Bank of Canada’s decision tonight. They’ve already reduced the key interest rate three times this year, bringing it to 4.25%. Markets are anticipating a 50bps rate cut tonight, as the weak economic outlook and falling inflation have led many analysts to expect consecutive large rate cuts, both tonight and in December.

Here are the latest mid-market rates:

Chart of the Day