Currency

Market reacts to lower US CPI

For a change, US CPI inflation surprised to the downside and this triggered a significant market reaction, says BNZ Markets this morning. US short end rates are lower but the 10-year rate is back to flat on the day after an earlier fall, said Jason Wong, senior markets strategist. “Risk appetite has exploded higher, driving a 2% gain in the S&P500 and an outsized move in currencies, with the USD down more than 1% and the NZD up more than 2% to 0.6420. “The much-anticipated US CPI report...

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KIwi steady on quiet session

10.8.22. It has been another quiet trading session with little newsflow, and market nerves ahead of tonight’s key US CPI report, notes BNZ Markets. US equities are lower and the US Treasuries curve shows further inversion against a backdrop of modestly higher rates. Currency movements have been modest, said Jason Wong, senior market strategist. Another profit warning from a semi-conductor company, this time Micron Technology, highlighted a rapid falloff in demand as customers reduce their...

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Kiwi dolar trades higher

9.8.22 9.It has been a slow start to the week with little newsflow; the market has reversed some of Friday night’s post US payrolls reaction, seeing a broadly weaker US dollar and lower Treasury yields, comments BNZ Markets. “Overnight, the NZD and AUD have outperformed, trading over 0.63 and 0.70 respectively, and currently sitting just under those levels,” says Jason Wong, senior markets strategist. “Market participants have had the weekend to mull over the strong employment and wages...

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Higher US bond yields lift US dollar

A very US strong nonfarm payrolls – across jobs growth, unemployment, and wages – triggered a big move higher in US bond yields on Friday night, notes BNZ Markets. The US 10-year rate blasted 14bps higher, to 2.83%, as the market moved to price an almost 80% chance of a 75bps Fed hike in September, says Nick Smyth. The US dollar stronger across the board, especially against the JPY, while the NZ dollar fell back to around 0.6240. Equity markets were only modestly lower on the day, even with...

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KIwi dollar moves back up

5.8.22 It’s been a relatively quiet night across markets (for a change) as investors wait on the US nonfarm payrolls report tonight, says Nick Smyth at BNZ Markets. US equities are little changed, global rates are generally lower, while the NZD has pushed above the 0.63 mark amidst a broadly weaker USD.  The BoE hiked its cash rate by 50bps overnight on inflation concerns, even as the UK economy was expected to enter recession later this year.  UK rates and the GBP have been volatile but now...

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Calm session for currency

4.8.22 Currency movements have been modest, but with the yen coming under pressure for a second day on higher risk appetite, says Jason Wong, senior markets strategist at BNZ Markets this morning. A lift in NZ’s unemployment rate saw only a temporary fall in the NZD, which is now flat for the day, although NZ rates went against global forces and fell. House Speak Pelosi has left Taiwan after vowing US support for the island in the face of China threats.  Other than some military operations...

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Surge in rates – Kiwi lower

3.8.22 Global rates have surged as Fed speakers take control of the narrative and remind the market of plans to tighten a lot further to bring inflation to heel, comments Jason Wong at BNZ Markets. US House Speaker Pelosi landed in Taiwan and buy the rumour, sell the fact on this has been an added source of upward pressure on rates. The US Treasuries sell-off has been led by the belly of the curve, with the 5-year rate up 22bps on the day. The USD has reversed it recent course, showing a...

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Taiwan central to market focus

2.8.22 Media reports that US House of Representatives Speaker Nancy Pelosi will visit Taiwan have spooked the market a little, comments BNZ Markets this morning. “The yuan is weaker, but there hasn’t been much spillover into the NZD or AUD, both trading higher, albeit against the backdrop of a weaker USD,” said Jason Wong, senior markets strategist. “The positive turnaround in the yen continues. Some risk-off vibe has helped a further modest rally in US10s, seeing the rate fall to its lowest...

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Big week for data lies ahead

1.8.22 The JPY continued its recent resurgence against a backdrop of lower US Treasury rates while the NZD closed the week just below 0.63, notes BNZ Markets this morning. Equity markets extended their post-FOMC rallies on Friday, capping off a very strong month (S&P500 +9.1%, NASDAQ +12.4%)., adds Nick Smyth. US and European economic data were stronger than expected, but there was little response from the bond market, with 10-year rates continuing to push lower. NZ rates had a massive...

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Big falls in bond rates

Global bond rates have seen further big falls overnight after US Q2 GDP growth came in negative, putting the US into a ‘technical’ recession, says BNZ Market. The lower rates backdrop has supported equity markets, which have extended their post-FOMC rally, says Nick Smyth. “Currency moves have been reasonably modest except for the JPY, which has seen a big appreciation (USD/JPY -1.6%) on the back of lower US Treasury rates. NZ rates continue to take their lead from offshore markets. The market...

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US dollar dip, Kiwi recovers

US equities have rallied, US Treasury yields have fallen and the USD is weaker, notes BNZ Markets this morning. US Federal Reserve chair Powell hasn’t been as hawkish as feared, following the widely anticipated 75bps hike from the Fed, says Jason Wong, senior markets strategist at BNZ Markets. “The NZD has recovered after taking another look below 0.62. NZD/AUD has traded at its lowest level in nearly five years. The Fed hiked the Fed Funds target range by another 75bps to 2.25-2.50% and...

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US dollar up on negative news-flow

A barrage of negative news including weaker data, an IMF economic downgrade and surging gas prices has seen US equities fall over 1% and the US dollar recover, notes BNZ Markets. Jason Wong, senior markets strategist says, “The EUR has underperformed, falling 1%, while the NZD shows a modest fall and NZD/AUD settling below 0.90. The US 10-year rate fell as much as 8bps overnight, but has since risen back to 2.79%, little changed from the NZ close. “The economic news flow remains dismal,...

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Kiwi slightly higher

It has been a quiet start to an eventful week ahead, with modest changes in European and US equity markets, notges BNZ Markets. US Treasury yields have pushed higher, reversing some of Friday’s large fall, says Jason SWong, senior markets strategist. The NZD has lagged gains for the AUD and CAD, while against higher US yields the yen has underperformed. The week ahead is stacked full of potential market-moving events including the US Fed’s policy meeting, US GDP and employment cost index data,...

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US dollar eases after big run

25.7.22 Friday saw big falls in global rates with recession fears returning to markets, notes BNZ Markets. The European composite PMI fell below 50, signalling negative growth in the region, while the US Services PMI dropped into contractionary territory as well, leading markets to aggressively pare back rate hike expectations, comments Nick Smyth. “Equities were lower on recession concerns, with tech stocks underperforming over concerns around online advertising spending.  The big mover in...

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Market focus on European events

22.7.22 It’s been another action-packed 24 hours in markets, notes BNZ Markets this morning. “The ECB hiked rates by a larger-than-expected 50bps, but the initial spike higher in the EUR and German rates has faded, both now little changed on the day,’ says Nick Smyth “Italian bonds have come under pressure from the political uncertainty in the country (new elections are set for September), with the ECB’s new anti-fragmentation tool getting a lukewarm reception. “The US 10-year rate has fallen...

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Italy crisis shadow over Euro

21.7.22 Italian politics have come back into the limelight overnight, with Draghi’s government on the verge of collapse after the major coalition parties withdrew their support. Italian bonds have sold off and the EUR has come under pressure but there haven’t been any major spill overs to broader markets. Indeed, US equities are higher on the day while the US 10-year rate has pushed up to 3.04%. The NZD is broadly unchanged over the past 24 hours, despite the fall in the EUR.  It’s a...

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Kiwi dollar breaks higher

20.7.22 Risk appetite is stronger overnight, with large gains in both European and US equity markets (S&P500 +2.5%), according to BNZ Markets. The EUR is almost 1% higher while European rates have increased after reports the ECB will consider a 50bps hike at this week’s meeting and announce its anti-fragmentation tool for supporting peripheral bond markets, says Nick Smyth. “The NZD has appreciated in sympathy with the EUR, breaking through the 0.62 mark overnight. “The EUR has continued...

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Kiwi spikes on CPI before settling

19.7.22 There hasn’t been a major theme to market movements overnight, with investors awaiting the big event risks in Europe later this week, says Nick Smyth at BNZ Markets this morning. “US equities are now slightly lower on the session, the US 10-year rate is slightly higher, while commodities have rebounded from their recent slump, helped by a weaker USD. “Ahead of these key upcoming European risk events, the EUR has rallied strongly, hitting a high of 1.02. “The NZD got an initial boost...

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Kiwi dollar firms up

18.7.22 Markets ended what was another very volatile week on a positive note, with the S&P500 rebounding almost 2% and most commodity prices increasing, notes BNZ Markets. “Long-term inflation expectations from the University of Michigan’s survey came in lower than expected while Fed officials appeared to downplay the prospect of a 100bps hike later this month, supporting lower global rates, says Nick Smyth. “The USD pulled back from a 20-year high as risk appetite improved, helping the...

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US inflation rate centre stage

15.7.22 US equities are weaker after fully digesting the CPI shocker and not helped by weaker earnings from two major banks, says BNZ Markets. The US Treasuries curve has unwound some of yesterday’s flattening, after Fed Governor Waller backed a 75bps hike, with him needing to see stronger data before backing a larger 100bps hike, notes Jason Wong, senior markets strategist. “Italian political manoeuvres saw EUR dip further below parity before recovering. Both the NZD and AUD hit fresh...

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Strong rise in US inflation

14.7.22 It has been quite an eventful night, with a strong upside surprise to US CPI inflation and a surprise 100bps hike by the Bank of Canada, comments BNZ Markets this morning. “Despite some intraday volatility, most net market moves don’t look out of the ordinary, with flat US equities and modest changes in currencies,” said Jason Wong, senior markets strategist. “The USD and JPY are broadly weaker.  The EUR very briefly traded below parity before recovering. The NZD hit a fresh 2-year low...

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Markets waiting on key data

13.7.22 Markets are trading with a slightly cautious tone ahead of tonight’s key US CPI release, notes BNZ Markets. US equities are flat, US Treasury yields are little changed from the NZ close and the USD has reversed course after hitting a fresh 20-year high. EUR came within a whisker of parity before recovering, while the NZD has also recovered modestly after hitting 0.61 overnight,” says Jason Wong, senior markets strategist. Oil prices have fallen back below USD100 per barrel. Most of...

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Sour note on risk sentiment

Risk appetite has begun the new week on a sour note, with weaker global equity markets, lower global rates and USD strength continuing, says Jason Wong at BNZ Markets. “Many currencies have printed fresh multi-year or multi-decade lows against the strong USD. The NZD dipped its toe below 0.61 overnight. “There hasn’t been much news to kick off the week but in a big week ahead, market nerves are fraying, seemingly concerned about the prospect of yet another lift in annual US CPI inflation,...

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Kiwi dollar at 2-year low

The US dollar index is up 0.9% on the day, and at a fresh 20-year high, says Westpac this morning. EUR fell from 1.0150 to 1.0050 - a 20-year low. USD/JPY rose from 136.70 to 137.75 – a 24-year high. Underperformer AUD fell from 0.6820 to 0.6715 – a two-year low, says Westpac strategist Imre Speizer. “NZD fell from 0.6170 to 0.6097 – a two-year low.  AUD/NZD fell from 1.1060 to 1.0995.\” “The main drivers of NZD/USD at present are global risk sentiment (proxied by equity prices, for example)...

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Commodity currencies outperform

11.7.22 // Strong US jobs data drove global bond rates higher on Friday night but other market moves were modest comments BNZ Markets. “Higher risk appetite saw commodity currencies outperform, with the NZD closing the week just under 0.62, ending an uneventful week for the currency,” notes Jason Wong, senior markets strategist. “EUR tumbled towards parity before reversing course and ending the week just under 1.02.” US non-farm payrolls grew a strong 372k in June and even accounting for a net...

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Commodity currencies and UK pound out-perform

8.7.22 Having been gripped by recession fears over recent weeks, markets are trading with a more upbeat tone overnight, notes BNZ Markets. “US equities and commodity prices are higher, the US 10-year rate is back to 3%, while global growth-sensitive currencies, including the NZD, are stronger,” says Nick Smyth. “The EUR remains under pressure though, falling to 1.0150 and bringing parity into closer view.  The nonfarm payrolls release is the key market focus in the session ahead. Market...

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Markets calm down, Kiwi lower

7.7.22 Market sentiment shows signs of stabilising, helped by a better-than-expected ISM Services survey, notes BNZ Markets this morning. US Treasury rates have rebounded overnight, with the 10-year rate increasing 12bps, while the USD has appreciated to a fresh 20-year high on a DXY basis, says Nick Smyth. “Recession fears still linger, but a stronger-than-expected ISM Services survey has, at least temporarily, helped lift market sentiment. “US equities are modestly higher, following...

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Sour sentiment-Euro at 20-year low

6.7.22 Risk sentiment has soured as global recession fears grip the market, says BNZ Markets this morning.   “US and European equity markets are weaker, global rates are lower, many commodity prices have tumbled more than 5%, and the USD has surged over 1%.,” says Jason Wong. The NZD and AUD fell to fresh 2-year lows overnight, while the EUR and GBP have performed even worse, the former down to a 20-year low. “After a long weekend, US market participants have returned in a bad mood with...

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Kiwi flat on quiet markets

5.7.22. With US markets closed for the Independence Day holiday, trading conditions have been quiet. Commodity currencies have found some favour, although going against the grain the NZD has been relatively flat, says Jason Wong at BNZ Markets. “The yen has underperformed against a backdrop of much higher European bond yields. “With the US on holiday, there has been little news and market movements have been modest apart from a notable lift in European bond yields.  This reverses some of last...

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Kiwi dollar dips below key support

Recession concerns continue to dominate markets at present and the NZ dollar has briefly broken key support on the downside. There were big falls in global rates again (US 10-year -13bps) in thin conditions, says Nick Smyth at BNZ Markets.   • Industrial commodities fall further on demand fears - copper now 25% off its highs   • NZD and AUD make two-year lows amidst stronger USD and global growth concerns   A soft ISM manufacturing survey on Friday night added to investors’...

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