Market Update 4/07/2024

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

Equities were stronger. The S&P 500 reached a new all-time high, surpassing 5,535 marking its 33rd record in 2024. The weak US ADP labour market report, along with a sluggish services sector, led US markets to increase the likelihood of a Fed rate cut by about 10% for September. This data pushed the USD DXY and US bond yields lower, with the 10-year yield dropping 7bps to 4.36%.
 
The USD stayed low after the latest Fed meeting minutes revealed that officials are waiting for clearer signs of cooling inflation and are split on how long to maintain high rates. Headlines indicate that the committee is nearing a decision to ease, but hasn’t made a final move yet. Other US data showed the services sector contracted at the fastest rate in four years, private payrolls grew more slowly, and continuing jobless claims increased for the ninth consecutive week.
 
NZDUSD climbed above 0.6100, reaching just below 0.6130 before pulling back, benefiting from a weaker USD. If the US NFP data tomorrow night exceeds expectations, we might see bond yields and the USD rise, especially with the timing around a holiday weekend. Conversely, a weaker NFP report could boost major currencies against the USD and possibly push NZD towards 0.6150. Notably, NZD has stayed above the 100-day moving average 0.6070 and 200-day moving average 0.6072 since 13thn May, which supports a positive outlook.
 
NZDAUD went lower as AUD outperformed on the back of bond yields following stronger-than-expected retail sales and building approvals data, increasing the likelihood of an RBA rate hike. Futures pricing showed a 50/50 chance of a hike at the November RBA meeting. In contrast, market expectations in NZ are leaning towards rate cuts, with approximately 38 bps of cuts priced in for the November RBNZ meeting.
 
NZDJPY made a fresh multi-year high above 98.70.
 
There are no significant economic events scheduled for the day, and no major economic data releases expected. US financial markets are closed due to the Independence Day holiday. The UK election is taking place tonight, with results expected to come in by tomorrow during the Asian trading hours. The opposition Labour party is currently leading in the polls by 20%, and this has likely already been considered by market participants.

Here are the latest mid-market rates:

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