Market Update 8/07/2024

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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Wall St. finished stronger Friday with the S&P 500 and Nasdaq hitting all time highs with revised payroll data showing signs of US labor market weakness. The Dow Jones Industrial Average gained 67.87 points, or 0.17%, to 39,375.87. The S&P 500 increased 30.17 points, or 0.54%, at 5,567.19 and the Nasdaq Composite rallied 164.46 points, or 0.90%, to 18,352.76.

This morning’s surprise French election results showing a likely win for the left New Populist Front securing 180-205 seats, while Macron’s centrist group likely to win 164-174 and the far right party performing much worse than indicated in the polls securing 120-130 seats. Note 289 seats were needed for an absolute majority and outright win so there will be plenty to see over the coming days as alliances are formed. EUR closed last week at 1.0839 and traded pre-market in a range of 1.0780 – 1.0800 before sitting 1.0796/1.0810

The monthly US employment report produced some mixed results with headline employment rising by 206, down from a negatively revised 218k though better than expectations of 190k. Tempering this somewhat was the fact that two month net revisions were -111k. The unemployment rate unexpectedly rose by 0.1% to 4.1% though the participation rate also rose by 0.1% to 62.6% as expected.  Average hourly earnings rose by 0.3% MoM and 3.9% YoY, matching expectations

Israeli PM Netanyahu said any Gaza deal must allow Israel to continue fighting until all war objectives are met and the deal must not allow weapon smuggling to Hamas via the Gaza-Egypt border. Netanyahu added that thousands of armed militants cannot return to northern Gaza under the deal and that the proposal to which Israel agreed allows the return of hostages without compromising war objectives, according to Reuters.

This week welcomes a handful of event risk investors will closely monitor, including Fed Chair Powell testifying before the Senate Banking Committee, US CPI inflation, and an update from the Reserve Bank of New Zealand (RBNZ).

Markets will also closely watch how the markets respond to Sunday’s second round of French elections. As most will already be aware, there is a chance of a Hung Parliament, but there is no clear majority at this stage

Chair Powell will be testifying to Congress this week and will begin with remarks to the Senate Banking Committee on Tuesday. His prepared remarks and Q&A are likely to be closely followed for any suggestions on when interest rate cuts could commence.

Here are the latest mid-market rates:

NZD/USD 24 HOURS

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