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Market Update 25/10/2024

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 showed a small gain, with attention on earnings reports. The S&P 500 is up 0.1%. The Euro Stoxx 50 and FTSE 100 closed 0.3% and 0.1% higher, respectively. Meanwhile, the yield on the US 10-year bond dropped by 6 bps to 4.19%.

Initial jobless claims for the week ending 19th October dropped to 227k, down from 242k previously. This marks the second consecutive weekly decline, bringing claims back to late September levels. Continuing claims rose to 1.897 million in the week ending 12th October, up from 1.869 million the prior week.

US PMIs slightly exceeded expectations, with the composite index holding steady at 54.3 since May, indicating a stable growth rate. The employment index remained mostly unchanged at 49.6, while both input and output price indices eased somewhat. Despite a 15k drop in jobless claims last week to 227k, the effects of Hurricane Milton were less significant than anticipated. However, data remains skewed by both Hurricanes Milton and Helene and the Boeing strike, making it difficult to draw clear conclusions, though there are no signs of significant weakness in the labor market.

With about 11 days remaining until the US election, the polls are extremely tight. Different polls show varying results, with some giving Trump a +3 lead, others showing Harris ahead by +4, or somewhere in between.

NZDUSD saw minimal net movement overnight, returning to 0.6020 after briefly rising above 0.6030. NZD remains highly sensitive to US election risks, given its role as a general risk proxy and its strong economic ties to China. The possibility of a Trump victory has increased this month, according to various betting markets. Higher tariffs could severely impact China and potentially affect the wider Asia-Pacific region. The 0.6050 level remains critical for breaking recent ranges, while the 200-day moving average at 0.6090 seems like a distant target for now. On the downside, attention is focused on 0.6000, with 0.5975 being a key Fibonacci level. Below that, 0.5850 marks the August lows.

NZDJPY was the biggest mover among NZD pairs, dropping to 91.20. Meanwhile, USDJPY fell 0.8% to 151.60. This week’s Japanese elections will be the main focus for yen investors.

NZDGBP traded to 0.4635 overnight, with GBP strength supported by UK interest rates. GBPUSD rose 0.4% to 1.2975. Bank of England Governor Andrew Bailey mentioned that disinflation in the UK is happening faster than expected, suggesting a rate cut is likely next month. Traders now anticipate a rate cut in November, with a 60% chance of another 25-basis-point cut in December.

This evening’s economic calendar is packed, though it mainly features second-tier data. This includes Tokyo’s CPI, Germany’s IFO survey, Canadian retail sales, and US durable goods orders and consumer sentiment figures.

Here are the latest mid-market rates:

Currency Pair Mid-market rate
NZD/USD 0.6014
NZD/AUD 0.9058
NZD/JPY 91.30
NZD/CNY 4.2839
NZD/EUR 0.5554
NZD/GBP 0.4636
NZD/HKD 4.6726
NZD/SGD 0.7927

 

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