Fed cut begins normalising settings
19.9.24 The US Federal Reserve has started their easing cycle with a larger than expected 50bp cut. “The Federal Reserve signalled it will be dialling back restrictive monetary policy settings towards more neutral levels given greater confidence on the inflation outlook and concerns over the labour market,” commented ASB Bank senior economist Mark Smith. Market expectations are for local OCR cuts to be bought forward. “We think the RBNZ will have similar concerns to the Fed, with larger...
US Dollar up vs G10 cohort
18.9.24 Fresh economic data didn’t materially change US market pricing for the size of the expected easing in the US Federal funds rate this week, according to BNZ Markets. Headline retail sales in the US increased by 0.1% in August, above consensus expectations for a 0.2% decline. This follows a 1.1% gain in July and points towards a still resilient consumer. US industrial production rose by 0.8% in August, easily beating expectations. “However, there were downward revisions which offset the...
Market awaits the Fed decision this week
16.9.24 Markets closed on Friday with the pricing for the Fed’s first easing for the cycle this week at a toss up between 25bps and 50bps, with media reports adding to the “confusion” says BNZ Markets this morning. The US Treasuries curve steepened further, with a short end-led rally in bonds, comments Jason Wong, senior markets strategist. “Lower rates supported US equities, adding to the strong gains for the week. Commodity currencies slightly underperformed, seeing the NZD close the week...
Canadian dollar makes gains
10.10.24 In currency markets the US dollar overnight was broadly stronger, according to BNZ Markets. The Canadian dollar was the only major currency to make any gain, even if small, nogted Jason Wong. senior markets strategist. “Broad USD strength from yesterday afternoon took the NZD down from 0.6185 to as low as 0.6125 overnight before recovering to around 0.6150. “The NZD is flat to modestly weaker on key crosses, including nudging down to 0.9230 against the AUD. NZD/CAD is the biggest...
Kiiw dollar losing ground
9.9.24 Weaker than expected US labour market data contributed to volatility across financial markets on Friday night, says BNZ Markets this morning. Growth sensitive assets traded lower with large falls across global equities, notes Stuart Ritson, senior fixed interest strategist. The S&P fell 1.7%, extending its weekly decline to 4.3%, the largest since March last year. US treasury yields whipsawed but ultimately ended lower in yield. The US dollar index made modest gains. “Growth...
US labour data impacts market
Further signs of cooling in the US labour market contributed to lower yields across bond markets and global equities remained soft after the sharp decline in the previous session, notes Stuart Ritson, senior fixed interest strategist at BNZ Markets. The S&P opened lower and is currently close to flat. Equities fell in Europe – the Euro Stoxx closed 1.3% lower – and Asian stocks also declined with the Nikkei falling 4%. The US dollar fell with the move concentrated against the yen. US job...
Steady session for US dollar
The US dollar index (DXY) was little changed overnight amid thin trading volumes, which were running at around 50% of recent averages, notes BNZ Markets “The stability in the DXY masked some underlying movement in G10 currencies,” comments Stuart Ritson, senior e4fixed interest strategist. “The Australian dollar outperformed in the offshore session and is close to 0.5% stronger against the dollar. “On the other end of the spectrum the yen was relatively weak losing 0.6% against the dollar....
US dollar reverses direction
There has been a reversal of recent price action, with US equities weaker, higher rates and a stronger US dollar, notes BNZ Markets today Behind the moves one could point to data suggesting no need for the Fed to panic, Fed speakers arguing for gradualism, and a return of the Trump trade in anticipation of Robert F. Kennedy dropping out of the race and endorsing Trump, commented Jason Wong, senior markets strategist. “After an overnight high around 0.6170, the NZD is trading near 0.6140 while...
Swap rates to trend lower
19.8.24 Just when economy has been showing increasing signs of brittleness under the continued pressure from high interest rates, inflation is getting under control. ASB chief economist Nick Tuffley notes in the bank’s quarterly outlook, “Recent signs suggest the RBNZ can be confident inflation will fall below 3% over the second half of this year and remain well contained beyond 2024. The RBNZ has reacted to the more encouraging inflation outlook by starting to cut the OCR. “Now that interest...
NZ dollar out- performing
A benign US PPI print got the market’s attention and helped drive lower US rates, a lower USD and higher US equities, said BNZ Markets this morning. Against broad-based weakness in the USD, the NZD has outperformed, steadily rising to 0.6075 and higher on the crosses. At yesterday’s close, the market was pricing 17bps worth of cuts for today’s RBNZ MPS, commented Jason Wong, senior markets strategist at BNZ “Significant rate cuts are likely to be projected by the RBNZ, as in May, the only...
