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The yield on the US 10-year remained steady at 4.26%. The US composite PMI for June rose slightly to 54.6, with the services PMI increasing to 55.1 and manufacturing improving to 51.7. Service output prices dropped to 53.4, down from this year’s peak of 56.6 and a series high of 73.3 in April 2022. Service prices are now within the pre-pandemic range of 50-55. Services employment climbed to 51.4, marking its first time above 50 in three months. In Europe, both the services and manufacturing PMIs were weaker than expected, at 52.6 and 45.6. Germany’s PMI declined further from 45.4 to 43.4.
Markets viewed both weaker and stronger PMI reports negatively on Friday. Weak European PMIs initially led to risk-off sentiment, but later, stronger US PMI data raised concerns about a potential delay in the Fed’s rate cut timeline. The USD generally strengthened, with the DXY (dollar index) rising by 0.2% to reach a 6-week high.
NZDUSD remained within narrow range and ended the week largely unchanged. It may struggle to break out of the short-term ranges we’ve been discussing. Support is still around the 0.6100-0.6085 level, with resistance near 0.6150.
NZDAUD bounced back above 0.9200 after weakening throughout last week. The RBA’s relatively hawkish statement suggests they are in no hurry to cut rates, and some even speculate about a potential hike. Although a hike is unlikely, the hawkish stance indicates a risk of AUD strengthening, which could push NZDAUD to test 0.9150 support levels.
USDJPY maintained a 0.4% gain after surpassing 159.00, nearing the psychological threshold of 160.00, which previously triggered intervention by Japanese authorities. Markets will continue testing these limits. It’s worth noting that the BoJ reportedly spent over 62 billion in intervention to push the rate down to 155 last time. The question now is how much would be needed to achieve the same result this time, and whether the BoJ is willing to do it. It seems likely that JPY will be the focus this week.
It’s a quiet day ahead for data releases. Domestically, the focus is the May trade balance. Later tonight, the German IFO business activity index will be released. Investors will be watching to see if the IFO reflects the same weakness observed in the PMIs.
| Currency Pair | Mid-market rate |
| NZD/USD | 0.6116 |
| NZD/AUD | 0.9209 |
| NZD/JPY | 97.69 |
| NZD/CNY | 4.4583 |
| NZD/EUR | 0.5718 |
| NZD/GBP | 0.4836 |
| NZD/HKD | 4.7741 |
| NZD/SGD | 0.8287 |
Here are the latest mid-market rates:
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