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
US equities rose as recession fears eased, while European and UK equities had mixed results. The S&P 500 gained 2.2%, the Euro Stoxx 50 remained unchanged, and the FTSE 100 fell by 0.3%. The yield on the US 10-year increased by 6.00 bps to 4.00%.
US initial jobless claims dropped by 17k last week to 233k, a larger decline than expected, while continuing claims matched expectations at 1.875 million. Despite typical seasonal factors like auto shutdowns, school holidays, and the impact of Hurricane Beryl, the market reacted positively to the data. The figures suggest a steady, rather than abrupt, weakening of the labor market, aligning with the possibility of a soft landing rather than a recession.
The data lowered the likelihood of the Fed making an emergency rate cut before the next meeting. As a result, the market adjusted its expectations, now pricing in 40 bps of cuts for the September meeting (down from 45 bps the day before) and 103 bps by year-end (down from 111 bps).
The USD initially surged after the data and rates market reaction but then gave up some of those gains.
NZDUSD dipped slightly following yesterday’s inflation expectations data but was later influenced by global factors. After briefly dropping below 0.5980 overnight, it has recovered to just above 0.6000, boosted by increased risk appetite. Level wise, if NZDUSD can stay above 0.6000 by the end of the week. If it does, the next challenge will be breaking through resistance levels around 0.6050, with specific levels of interest being the 50-day moving average at 0.6069, the 200-day moving average at 0.6086, and a Fibonacci retracement level at 0.6072. On the downside, it might support around 0.5980, with another potential support level at 0.5915.
NZDAUD has retreated after trying to break 0.9200, falling back to around 0.9120. This shift happened as the AUD outperformed in the last 24 hours due to a more hawkish outlook from the RBA and weaker NZ inflation expectations data. Reserve Bank Governor Michele Bullock stated that the bank is prepared to raise interest rates if necessary, despite the challenge of balancing inflation control with job preservation. She highlighted that regional labor markets are tighter than those in capital cities. Speaking in Armidale, NSW, Bullock emphasized the RBA’s strong focus on inflation, which influenced their decision to keep rates unchanged at this week’s meeting.
Not long ago, 0.9000 seemed at risk, and it’s still a valid concern. However, the AUD typically takes a bigger hit during risk-off events.
NZDJPY has continued to recover, reaching 88.55. The combination of higher rates and increased risk appetite has led to the yen underperforming, with USDJPY rising to 147.20.
NZDGBP has edged down to around 0.4715, while NZDEUR has climbed back to 0.5510.
It’s a quiet end to the trading week in terms of data. China’s CPI and PPI reports will be out today at 1:30 pm, and Canada’s employment report will be the only release in the early hours of Saturday morning.
Here are the latest mid-market rates:
| Currency Pair | Mid-market rate |
| NZD/USD | 0.6012 |
| NZD/AUD | 0.9125 |
| NZD/JPY | 88.54 |
| NZD/CNY | 4.3194 |
| NZD/EUR | 0.5510 |
| NZD/GBP | 0.4720 |
| NZD/HKD | 4.6873 |
| NZD/SGD | 0.7971 |
NZD/USD 24 HOURS
Disclaimer:
The market update provided by Corporate Alliance FX (CAFX) is for reference only and does not constitute a bid, levy, offer or invitation to offer for the financial product, the basis for any contract or commitment, a recommendation for the purchase or sale of any investment instruments, financial, legal, tax, investment advice, investment advice or other opinions. It will not be legally liable for any consequences or losses caused by the information or content involved.
Corporate Alliance Group Pty Ltd T/A Corporate Alliance FX (CAFX) (ABN 58 167 119 226, AFSL 523351) (i.e. CAFX), CAFX independently holds the Australian Financial Services licence no. 523351 (AFSL), so CAFX is regulated by the Australian Securities and Investment Commission (ASIC) and, and although ASIC is a strictly regulatory body, it does not endorse a specific financial product. ASIC’s regulation of CAFX applies to all services under the financial licence held by CAFX, including the issuance of foreign exchange settlement, foreign exchange payments, foreign exchange risk control, hedging, market making and providing financial advice.
