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Market Update 31/07/2024 

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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US equities were down ahead of central bank meetings and rising tensions in the Middle East after an Israeli strike on Beirut. The USD made slight gains, while bond yields remained mostly stable. The yield on the US 10-year dropped by 3 bps to 4.14%.
 
Overnight, US Consumer Confidence increased by 2.5 points to 100.3. In the Eurozone, Q2 GDP grew by 0.3%, surpassing the expected 0.2% increase.
 
The US JOLTS data in June were 8.18 million job vacancies, which is a slight increase from the revised 8.23 million in May and exceeded expectations. The rates of hiring and quitting remained consistent at 3.4% and 2.1%, respectively. The ratio of job openings to unemployed individuals decreased to 1.2:1, aligning closely with the average seen before the pandemic.
 
NZDUSD managed to bounce back despite weaker equities overnight, rallying throughout yesterday and maintaining gains. It has outperformed, likely due to being technically oversold on the RSI. It has recovered to just over 0.5900 in the past few hours, potentially giving a positive bias for NZD with support around the previous lows at 0.5850-60. Currently, it’s right at the October & April support line of 0.5900.
 
NZDAUD has risen to 0.9025, mostly due to market positioning after a 3-cent decline since June. There is support at 0.9000, then at 0.8980, and previous lows at 0.8950. On the upside, it has encountered resistance at 0.9035, which aligns with the 23% Fibonacci retracement level and is a short-term resistance point. If the rate moves above 0.9035, it will become the new support level. At the same time, AUDUSD is facing difficulties around 0.6535.
 
NZDJPY is stable at 90.20 after reaching 91.5 overnight. The yen gained strength after a media report hinted that the BoJ might consider a 15bps rate hike at today’s meeting. The market is expecting a 7bps hike, with some doubts about the BoJ tightening and providing a clear bond purchase reduction plan. The media report increases the chances of a hike of at least 10bps, and possibly 15bps. Rate hikes in Japan are long overdue and would support the yen’s recent recovery. If there is no hike or dovish signals are given, the yen’s recent strength could quickly reverse. Following the media report, USDJPY dropped 0.5% to 153.20 overnight.
 
NZDGBP has bounced back to 0.4600. Tomorrow night, the BoE is expected to cut rates by 25 basis points.
 
NZDEUR has increased to 0.5460. In the Eurozone, GDP grew by 0.3% in the second quarter, which was slightly better than anticipated, although Germany’s economy contracted by 0.1%. Regarding inflation, Germany’s CPI was a bit higher than expected at 2.6%, while Spain’s CPI was lower than anticipated at 2.9%. Despite these figures, the market still expects the ECB to cut interest rates by 25 bps at its meeting in September.
 
The schedule for today is packed. During New Zealand trading hours, key releases include the ANZ NZ business outlook survey, China PMIs, Australian CPI, and the BoJ policy meeting. A surprise increase in Australian inflation could put more pressure on the RBA to raise rates again. Later tonight, important data will include euro area CPI and the US employment cost index, ahead of the Fed’s policy announcement at 6 AM NZ time. The Fed is widely expected to indicate a potential rate cut in September, depending on future data, which is already factored into the market.

 
Here are the latest mid-market rates:

Currency PairMid-market rate
NZD/USD0.5903
NZD/AUD0.9030
NZD/JPY90.10
NZD/CNY4.2752
NZD/EUR0.5460
NZD/GBP0.4600
NZD/HKD4.6115
NZD/SGD0.7924

NZD/USD 24 HOURS 

Disclaimer:

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