Risk Currencies Turn Down as Taliban Rule Returns

Market Overview

• Worldwide coronavirus cases surpass 208.458 million with over 4.381 million official
• Thousands of US Troops will stage a mass exodus of Afghanistan over the coming days with US president Biden vowing ongoing support to the Afghan people outside of the country.
• The New Zealand Dollar (NZD) holds ground as markets wait for RBNZ rate decision Wednesday
• The State of New South Wales has recorded 452 new coronavirus cases and 1 death in the past 24 hours.

Major Announcements last week:

  • NZ Inflation Expectations comes in at 2.27% over the next two years
  • US Producer Price Index for July shows good demand at 1.0%
  • US Core CPI for July prints at 0.5% down from 0.9% with y/y inflation remaining at 5.4%

Economic Releases: 2021-08-17

Tuesday 17/08
1:30pm, AUD, Monetary Policy Meeting Minutes

Wednesday 18/08
12:30am, USD, Core Retail Sales m/m
Forecast 0.20%
Previous 1.30%
12:30am, USD, Retail Sales m/m
Forecast -0.20%
Previous 0.60%
1:15am, USD, Industrial Production m/m
Forecast 0.50%
Previous 0.40%
5:30am, USD, Fed Chair Powell Speaks
2pm, NZD, NZD, Official Cash Rate
Forecast 0.50%
Previous 0.25%
2pm, NZD, RBNZ Monetary Policy Statement
2pm, NZD, RBNZ Rate Statement
3pm, NZD, RBNZ Press Conference
6pm, GBP, CPI y/y
Forecast 2.30%
Previous 2.50% Read more

Weekly Key Points: 2021-08-13

FX Update: 

Medium House Prices in New Zealand increased from 815,000 to 826,000 or 1.3% from June to July and a whopping 25.2% from y/y from 659,500 showing no signs of easing just yet. The strength in the market is reflected by the REINZ House Price Index which reached a new high of 3,937 for July. Values should hold across the country for a few months yet especially if we consider the seasonally adjusted figures paint an incredible picture mid-winter. With the RBNZ predicted to start hiking interest rates next week from the current 0.25%, we expect easing in the property market to start taking effect towards mid next year when values could start to slide.  Read more

NFP Strengthens Greenback

Market Overview

• Worldwide coronavirus cases surpass 204.096 million with over 4.315 million official
• New Zealand Medal Table at the close of the Tokyo Olympic Games: Gold 7, Silver 6, Bronze 7.
• The Bank of England left interest rates and QE level unchanged at their regular meeting with expectations the economy will return to the pre-covid 2019 economic levels by the end of the year.
• Gold dropped in value in early Monday trading from 1810 per ounce to 1683 after a large market order to sell 4B in stock.
• The State of New South Wales has recorded 356 new coronavirus cases in the past 24 hours.

Major Announcements last week:

  • The RBA maintained their Cash Rate at 0.10% as the central bank kept “tapering” on the table
  • New Zealand Unemployment Rate plummets to 4.0% from 4.7% in July
  • The Bank of England maintainted their policy stance to meet inflation target of 2.0%
  • US Non Farm Payrol (NFP) rose by 943,000 in July from 850,000 in June
  • US Unemployment Rate drops to 5.4% from 5.9%
Direct FX

Economic Releases: 2021-08-09

Monday 09/08
All Day, JPY, Bank Holiday

Tuesday 10/08
4am, USD, FOMC Member Barkin Speaks
1:30pm, AUD, NAB Business Confidence
Previous 11
9pm, EUR, ZEW Economic Sentiment
Forecast: 55.3
Previous: 61.2
9pm, EUR, German ZEW Economic Sentiment
Forecast: 54.9
Previous: 63.3

Wednesday 11/08
12:30pm, AUD, Westpac Consumer Sentiment
Previous 1.50% Read more

Weeky Recap: 2021-08-06

The Reserve Bank of Australia (RBA) left interest rates and policy settings unchanged after Tuesday’s meeting, which lent some support to the Australian dollar. The RBA continues to forecast a September start to tapering asset purchases (quantitative easing) and this was a surprise to some in the market who had expected the recent Covid lockdowns would see the bank delay tapering. It seems the central bank isn’t too concerned about the economic impact of the current lockdowns, at least at this stage. But with cases still growing sharply the likelihood of the current lockdowns dragging out much longer than expected is rapidly growing. Read more

Central Bank Action Looms

Key Points:
• Worldwide coronavirus cases surpass 199.022 million with over 4.240 million official deaths.
• Australian Bank Holiday saw a quit start to the week.
• Covid fears send Oil and stocks lower Monday.
• Sydney, Australia has reported another 207 new cases of coronavirus Monday.
• New Zealand’s Medal Tally- 4 Gold, 3 Silver, 4 Bronze making us twelfth on the medal table.
• AUD to come under selling pressures if the RBA delay their taper.
• Japan extended its state of emergency to Osaka recently and 3 areas near Tokyo to avoid a spike in coronavirus cases in efforts to avoid a possible system collapse during the Olympics. Read more

Economic Releases: 2021-08-02

Monday 02/08
All Day, AUD, Bank Holiday

Tuesday 03/08
All Day, CAD, Bank Holiday
2am, USD, ISM Manufacturing PMI
Forecast: 60.8
Previous: 60.6
4:30pm, AUD, RBA Rate Statement

Wednesday 04/08
10:45am, NZD, Employment Change q/q
Forecast: 0.70%
Previous: 0.60%
10:45am, NZD, Unemployment Rate
Forecast: 4.40%
Previous: 4.70% Read more

Weekly FX Recap: 2021-07-30

FX Update: 

The Federal Reserve Rate announcement and Monetary Policy Thursday morning was “as predicted” with investors expecting the Fed to hold rates to near zero and continue with their asset buying. Markets were keen to see what road chairman Jerome Powell would head down with inflation and tapering of their bond buying program. Powell stuck with the 120B bond buying but said the economy has made progress recently toward jobs and inflation goals but would continue to assess progress in the upcoming meetings. On one side it looks as if they should start tapering, but on the other hand they have the unemployment picture showing they are not quite ready to pull the trigger – also coupled with coronavirus cases increases concerns. In summary we don’t think the Fed could have been more dovish in their stance on current policy and where things are headed over the rest of 2021. Stock markets held steady post the release but with the Fed potentially ready to fire a warning shot in upcoming meetings we could see equity markets pull back off record highs and put a halt to any upside momentum in the New Zealand Dollar. The Greenback also weakened off across the board following the Fed release with the overall tone being, the Fed will keep a soft policy approach until well into 2022-2023.    Read more

Markets Await Fed Monetary Policy Announcement

Market Overview

• Worldwide coronavirus cases surpass 195.330 million with over 4.182 million official deaths.
• Australian CPI y/y is expected to jump from 1.1% to 3.8% tomorrow.
• Sydney, Australia has reported another 172 new cases of coronavirus in the past 24 hours of which 62 were in the community.
• US indices- DOW, Nasdaq and S&P all close near record highs.
• A leading US indicator of economic health- the New Home Sales indicator published at 676k compared to 800k predicted, the number of new homes built in June. This result is the worst release since figures were published in April 2020.
• Hayden Wilde wins a Bronze in the Men’s Triathlon, this is New Zealand’s first medal at the Tokyo Olympics. Read more