Currency

Kiwi dollar powers upwards

The NZ dollar continued to power higher, ending the week above the 0.64 mark for the first time in over three months while the NZD/AUD cross hit 0.94 for the first time since January, notes BNZ Markets. “ NZ rates were sharply lower on Friday, with the market starting to question whether the RBNZ will need to take the OCR to a 5.50% peak after all,” says senior interest strategist Nick Smyth. “In news over the weekend, several major Chinese cities announced further loosening of Covid...

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Greenback drops, Kiwi rises

2.12.22 The USD remains under pressure, falling further after Fed Chair Jerome Powell’s speech yesterday and some softer overnight data helping sustain the move, notes BNZ Markets. “The NZD traded as high as 0.64 overnight, continuing its outperforming run while NZD/AUD continues to appreciate,” says Jason Wing, senior markets strategist. “JPY and GBP have also put in very strong performances over the past 24 hours. US Treasury yields have pushed lower while the S&P500 has eased back after...

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Focus falls on China

1.12.22 Optimism around an eventual shift away from the zero-Covid policy in China continues to gather momentum, says BNZ Markets. Bloomberg is reporting the health authorities are planning a fourth vaccine shot and state media appear to have subtlety shifted their messaging around Covid, says Nick Smyth. Market moves have been relatively contained over the past 24 hours as investors waited on Fed Chair Powell’s speech earlier this morning.  US equities are flat to slightly lower, US rates...

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Chinese currency pulls Kiwi up

30.11.22 Market sentiment has shown signs of rebounding over the past 24 hours as the Chinese authorities signalled steps to increase vaccination of the elderly, seen as another step towards the eventual abandonment of the zero-Covid policy next year, notes BNZ Markets. “The CNH is almost 1.5% stronger since this time yesterday, helping to lift the NZD back to 0.62, while the Hang Seng surged over 5%,” says Nick Smyth. “There hasn’t been much impact on broader markets however, with US equity...

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Market focus on protests in China

29.11.22 Risk appetite has turned more cautious to start the week, with investors focusing on the weekend protests in China against the Chinese government’s zero-Covid policy, notes BNZ Markets The market fallout from the protests has been reasonably contained so far, with the S&P500 off by around 1% and oil prices and US Treasury yields rebounding from their falls yesterday, says Nick Smyth “The NZD and AUD have weakened, in sympathy with a lower CNY, the NZD falling back below 0.62,...

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Markets watching China’s Covid surge

28.11.22 It was a relatively quiet end to the week for markets, with US trading activity unsurprisingly much lighter than usual given Thursday’s Thanksgiving holiday, notes BNZ Markets. Equity markets and currencies were little changed, the NZD ending the week at 0.6250. European bond rates were sharply higher as the market digested hawkish ECB comments, but the US 10-year rate was little moved, ending the week just under 3.70%. NZ rates consolidated on Friday, with market expectations for the...

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Risk appetite runs on – NZD pushes up

For the third day running, risk appetite is on a higher trajectory, with higher global equity markets, lower global rates and a weaker USD, notes BNZ Markets. It has been quiet overnight with US markets closed for Thanksgiving, says Jason Wong, senior markets strategist. . The NZD pushed up to a fresh three-month high towards 0.63 and, following a 14% gain from the mid-October low, the technical RSI has reached the “overbought” level of 70. With US markets closed, trading conditions have been...

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Higher risk appetite – Kiwi firm

24.11.22 Higher risk appetite has extended, with another positive session on Wall Street, lower global rates and a weaker US dollar, notes BNZ Markets. Data releases were mixed, with the market giving more weight to signs of US economic weakness than the positive surprises, comments Jason Wong, senior markets strategist. NZ rates rose sharply and the yield curve flattened significantly after the RBNZ delivered a record 75bps lift in the OCR to 4.25% and projected much higher rates to come,...

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Cash rate rises to 4.25%

The RBNZ lifted the Official Cash Rate (OCR) 75bp to 4.25% today with the release of its Monetary Policy Statement (MPS). “The tone of the Statement was even more hawkish than we expected, says ANZ chief economist Sharon Zollner. “We have revised up our forecast OCR track, adding to our existing 75bp hike in February a 50bp hike in April and a 25bp hike in May, which would take the OCR to a peak of 5.75%. Key Points: The RBNZ noted that they “gave consideration to an increase in the OCR of 75...

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NZ dollar higher ahead of OCR decision

It has been an uneventful trading session overnight, on low volumes, ahead of the US Thanksgiving holiday, notes BNZ Markets this morning. “Risk appetite is higher, with seemingly more weight put on the Fed dialling down its hawkish policy stance than the current COVID outbreak in China,” says senior markets strategist Jason Wong. “US equities are higher, US Treasury rates are lower, and the USD is broadly weaker. The market has positioned itself for a hawkish policy update from the RBNZ...

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China growth issues surface

22.11.22 Markets have traded with a more cautious tone to start the new week, with equity markets lower and the USD stronger, says Nick Smyth at BNZ Markets this ,morning. Oil prices have fallen on concerns around Chinese growth, as some cities reimpose Covid restrictions, and reports, since denied by Saudi Arabia, that OPEC+ will consider a production increase.  Global rates are slightly lower overnight and yield curves are again flatter, the US 2y10y curve pushing down to fresh 40-year lows...

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Kiwi dollar remains on higher level

Friday saw an uneventful end to the trading week, with a modest gain in US equities, says BNZ Markets this morning. Changes in currency markets were modest. US Treasury yields continued to push higher and with a flatter curve, taking the 2s10s spread to the most inverted in over forty years, notes senior markets strategist Jason Wong.. “The NZD closed up for the fifth consecutive week at around 0.6150, after taking another peek above 0.62 on Friday night. Oil fell and capped off a poor week,...

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Market reversal on recent moves

There has been a modest reversal of some of the market moves seen over the past week, with equities falling, bond yields rising and a stronger USD, says Jason Wong at BNZ Markets this morning. The Fed’s Bullard has added to the downbeat mood, with a more hawkish assessment of how high rates might need to go. The UK fiscal update showed some austerity ahead, but mostly backloaded until after the next election in over two years. US Treasury yields are up 7-10bps, while the NZD traded below 0.61...

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Markets more cautious around inflation

17.11.22 After the burst of optimism over the past week, as investors digested the downside surprise to US inflation, markets have traded with a more cautious tone overnight, notes BNZ Markets. US equities are lower, giving back a little of their recent strong rally, while the US 10-year is down to 3.71%, its lowest level in six weeks. Currency moves have been more restrained, with the USD largely consolidating after its recent big move lower, says Nick Smyth.  The NZD is back to around...

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Kiwi, AUD and sterling higher

Market sentiment is positive, with gains across key asset classes and a weaker US dollar, says BNZ Markets this morning. “There looked to be some anticipation of weaker US PPI data and the release delivered on that, sustaining the moves,” notes Jason Wong, senior markets strategist at BNZ Markets. US equities show gains of 1-2%, global rates are lower with the US 10-year rate some 6bps below the NZ close, and the USD is broadly weaker. The NZD spiked above 0.62 before retreating to 0.6175, up...

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Fed says don’t get ahead of us

15.11.22 The new week has begun on a quiet note and with a small unwinding of some of the big moves seen post last week’s downside miss to the US CPI, says BNZ Markets. US Treasury yields are up 6-7bps. US equities have spent most of the session in negative territory, but are flat as we go to print, notes Jason Wong, senior markets strategist. The USD has is broadly stronger with JPY and GBP, two of the largest gainers in the aftermath of the CPI, showing the largest declines. The NZD is...

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Greenback drops on surprise CPI, rates slide, Kiwi up,

12.11.22 A much weaker US CPI print drove a massive market reaction with US equities surging, a significant fall in rates as the market pares back Fed rate hike expectations, and a much weaker USD, says BNZ Markets this morning. “Fed officials welcomed the inflation news but emphasised the need for further hikes, even if agreeing that stepping down hikes was appropriate,” says Jason Wong, senior markets strategist. “Some stop-losses in currency markets have been evident, with the largest gains...

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Stalemate looms in US elections

Risk appetite is weaker, with the Republican party doing worse than expected in the US mid-term elections and the results still up in the air, some contagion worries after the meltdown in cryptocurrencies, and nerves ahead of tonight’s key US CPI release, says BNZ Markets this morning The S&P500 is currently down about 1%, the USD is broadly stronger, with the NZD just under 0.59, and US Treasury yields are slightly lower, notes senior markets strategist Jason Wong. US mid-term election...

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Kiwi dollar on the rise

9.11.22 Risk appetite has continued to rebound overnight as investors await the results of the US midterm elections and the all-important US CPI data later this week, notes BNZ Markets. Global rates are lower, the US 10-year rate back to around 4.13%, helping to support a further lift in equities (S&P500 +1.3%) and a weaker USD. The NZD has pushed up to almost 0.60. “Yesterday saw a large jump in 2-year ahead NZ inflation expectations, solidifying expectations for a 75bps RBNZ rate hike...

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Speculation China may end zero-Covid policy

7.11.22 Rumours around an upcoming end to China’s zero-Covid policy dominated price action on Friday, overshadowing nonfarm payrolls, says BNZ Markets this moirning. “Optimism around Chinese reopening led a sharp move higher in the CNH, which flowed through to an almost 3% appreciation in the NZD and AUD, while commodities surged (copper +7%) alongside other risk assets,” says Nick Smyth. “However, we should see an abrupt reversal today after Chinese officials quashed these rumours over the...

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Pound falls, rates volatile

4.11.22 Market moves overnight have been dominated by the fallout from the Fed meeting, at which chairman Jerome Powell emphasised a higher-for-longer interest rate outlook. US rates have pushed higher, the USD has appreciated sharply, while equities have extended their post-Fed sell-off, says Nick Smyth at BNZ Markets. “The GBP is down almost 2% overnight amidst a stronger USD and after a dovish Bank of England meeting, at which Governor Bailey pushed back against market expectations for...

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Which way is the Fed veering?

3.11.22 The main focus has been on the US Federal Reserve’s 75bps hike this morning, with a notable dovish pivot in the FOMC statement. This supported US equities, drove US Treasury yields lower and the USD lower. Chairman Jerome Powell conveyed a hawkish message and some of that initial move has faded, said Jason Wong, senior markets strategist at BNZ Markets. As widely expected, the Fed raised the Fed Funds target range by 75bps to 3.75-4.0%. Of most interest to the market, the Fed included...

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Rollercoaster night, rumours and jolts

2.11.22 The market has been on a rollercoaster ride, with stronger risk appetite on rumours of China looking to end its zero-COVID policy and hope for weaker US economic data, notes CommSEc. “That rumour on zero-COVID proved untrue and a much stronger than expected US JOLTS reports has seen a big unwind of prior movements,” says Jason Wong, senior markets strategist at BNZ Markets. “The NZD is back to 0.5840 after breaking up through 0.59 and the US 10-year rate is back at 4.05% after a trip...

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Commodity currencies outperform

The overnight trading session has been uneventful, as a turbulent month closes and ahead of a busy week loaded with event risk, notes BNZ Markets. Against a backdrop of a stronger USD, commodity currencies have outperformed, led by the NZD as it manages to hold its ground, supported by month-end buying with NZGBs being added to the WBGI. “This also saw NZGB yields fall into month-end and wider swap spreads.,” said Jason Wong, senior markets strategist. “US equities are closing the month on a...

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Equities and rates rebound

31/10/22 Equity markets closed last week on a positive note, with a strong earnings report from Apple (a relief after recent disappointing results from other big tech firms) contributing to a 2.5% rally in the S&P500. Global rates rebounded to end the week, helped by much stronger-than-expected European country-level CPI data, a reminder that central banks still have work to do get inflation under control. The US 10-year rate ended the week back above 4% while German rates reversed their...

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Euro the key mover on currency markets

28.10.22 The emergent market narrative around central banks having passed the point of ‘peak hawkishness’ has gained further momentum overnight, says BNZ Markets. The ECB raised rates 75bps, as expected, but markets interpreted the statement as suggesting the ECB is becoming more cautious about the need for further aggressive tightening, notes Nick Smyth. European bond rates have fallen sharply, spilling over into other bond markets, and driving the US 10-year rate back below 4%.  The EUR has...

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US dollar pulls back, Kiwi climbs

The global bond market rally continues after reaching oversold territory at the end of last week, with lower rates egged on by expectations of an imminent Fed pivot, says BNZ Markets this morning. The Bank of Canada has provided some support to that view, hiking rates by “only” 50bps. This triggered a boost to Canadian and US equities. Jason Wong, senior markets strategist at BNZ Markets comments, “The USD shows further signs of vulnerability on the Fed pivot view, with another session of...

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US dollar weaker, sterling gains

26.10.22 e The USD has shown further signs of vulnerability against the backdrop of weaker economic data and shows broadly based losses, says BNZ Markets. GBP has outperformed as new PM  Rishi Sunak gains the confidence of the market. The NZD has pushed up to 0.5750. “Markets are still trading in the afterglow of the planted WSJ article by Nick Timiraos, who is seen as a mouthpiece for the FOMC when it seeks to send a message to the market,” says Nick Wong, senior markets strategist. “There is...

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Glint of optimism on size of rate hikes

After a punishing past few months, the last two trading sessions on US markets have seen a burst of optimism, says Nick Smyth at BNZ Markets. This was spurred by an article by Wall Street Journal ‘Fed whisperer’ Nick Timiraos that the Federal Reserve might consider stepping down the pace of rate hikes in December. “The market has pared back Fed rate hike pricing, with the peak in the Fed funds rate now expected to be below 5%, triggering a big steepening in the US curve (the 10-year rate is...

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Relentless rise in global rates

Market moves overnight have been a little more subdued by recent standards, but the relentless upward trend in global rates remains in force, says Nick Smyth at BNZ Markets this morning. The US 10-year rate hit 4.20%, its highest level since 2008, while USD/JPY touched 150 for the first time since 1990. “Liz Truss finally resigned as UK Prime Minister but there hasn’t been much market impact, given her low-tax policy agenda had already effectively been ditched. Currency moves have been...

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