NEW ZEALAND: ANZ Consumer Confidence Down In July, Inflation Expectations Up
The New Zealand ANZ consumer confidence index fell by 4.1% in July, putting the index back at 94.7 (prior was 98.8). The trend in consumer sentiment since the start of the year has largely been sideways. The index peaked around 100.0 at the end of last year, after trending up from lows of 82 from earlier in the year. Since late 2021, the index has spent no time above the 100.0 level. See the chart below, the white line on the chart is NZ private consumption growth in q/q terms.
- Most of the sub indices ticked lower, with the economy 1yr ahead at -16, versus -13 prior (although we are still above recent lows). Family finances for the year ahead fell to 11 from 20 in June. Time to buy a major household item eased to -8 from -7 (also above recent lows). Inflation expectations also rose to 5.1% from 4.9% prior. This was the highest read since 2023.
- ANZ noted: "“Soft consumer confidence is both a reflection of and a contributor to the sluggish economy”: ANZ, “The economy is making hard work of recovering from last year’s recession. Activity indicators have slipped in recent times and it’s entirely possible that both GDP and employment went backwards in the June quarter” (via BBG).
Fig 1: ANZ NZ Consumer Confidence & Household Consumption Growth
Source: Bloomberg Finance L.P./ANZ/MNI
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AUD: AUD/USD - Consolidates Towards 0.6600
The AUD/USD had a range overnight of 0.6562 - 0.6590, Asia is trading around 0.6580. The AUD/USD had a quiet session as it consolidated its recent gains at the highs for the year. The market will be watching for signs of this move building momentum for a more significant move higher, could the catalyst be NFP on Thursday ?
- (Bloomberg) - "Trade latest: Trump said a trade deal with Japan is unlikely and expects it to pay a tariff rate of “whatever the number is that we determine.” He was more optimistic about an India pact, while adding that he’s standing firm on his July 9 deadline."
- “Australia May retail sales and building approvals are likely to have risen over the previous month, according to Bloomberg surveys.”(BBG)
- The AUD/USD is breaking through the top of its recent range as the pressure on the USD increases. First support is seen back towards 0.6500.
- The AUD needs a sustained break above 0.6550/0.6600 to potentially start building momentum for an extended move higher, a close back above 0.6600 and the focus would turn back to 0.6900/0.7000.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6550(AUD654m). Upcoming Close Strikes : 0.6600(AUD2.55bm July4).
- CFTC Data shows Asset managers increasing their shorts -36967, the Leveraged community has also added to their shorts -22963.
- Data/Event: Building Approvals, Retail Sales
Fig 1: AUD/USD spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
AUSSIE 10-YEAR TECHS: (U5) Bear Cycle Remains Intact For Now
- RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 1: 95.960 - High Apr 7
- PRICE: 95.825 @ 15:52 BST Jul 01
- SUP 1: 95.415/95.300 - Low May 15 / Low Jan 14
- SUP 2: 95.275 - Low Nov 14 (cont) and a key support
- SUP 3: 94.707 - 1.0% 10-dma envelope
Aussie 10-yr futures rallied well on the RBA rate decision, reversing a small part of recent weakness. Recent price action pressured prices through to new pullback lows last week. Next support undercuts at 95.420 (pierced), the Feb 13 low, ahead of 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition. To the upside, a recovery of recent losses would shift attention to resistance at 96.207, a Fibonacci retracement point.
US TSYS: The Front-End Leads The Bounce In Yields
TYU5 reopens at 112-02, down 0-02 from closing levels in today’s Asia-Pac session.
- Overnight the US 10-year yield had a range of 4.1852% - 4.2769%, closing around 4.24%.
- Treasury yields bounced overnight led by the front-end, which saw the yield curve continue to flatten (2s10s -3.75 at 46.713, 5s30s -4.79 at 92.764).
- MNI FED: Powell: "Really Can't Say" If July Too Soon To Seriously Consider Cut. Fed Chair Powell speaking on an ECB forum panel asked if July is too soon to seriously consider a rate cut and he certainly doesn't categorially rule it out, even if it's couched in typical central bank-speak: "Yeah, I really can't say - it's going to depend on the data. And we are going meeting by meeting. I mentioned, you know, how I'm thinking about that, but I wouldn't take any meeting off the table or put it directly on the table, it's going to depend on how the data evolve."
- MNI US DATA: Another JOLTS Report Ruling Out Sharper Labor Deterioration. The JOLTS report for May saw stronger than expected job openings whilst quit and hiring rates plus the level of layoffs all pointed to broad stabilization in the labor market rather than showing signs of further moderation
The 10-year yield has seen a bounce after a very strong move lower with some paring back of longs. Any bounce back to the 4.35% area would offer buyers a decent level to add again.
Fig 1: 10-Year US Yield Hourly Chart
Source: MNI - Market News/Bloomberg Finance L.P
