FOREX: NZDUSD Extends Five-Day Bounce to 8%
Apr-15 09:03
- The more stable tone for risk this week continues to foster a more constructive backdrop for higher beta currencies in the G10 space. AUD and NZD have both risen the best part of half a percent on Tuesday. For NZDUSD specifically, the pair has rallied as high as 0.5928, perfectly matching initial resistance, at the late November highs. In just 5 sessions, NZDUSD has bounced 8% from its cycle lows.
- For AUDUSD, we are reapproaching the 0.6400 mark, and a break above 0.6409 would place the cross at the highest level since December, signalling scope for a stronger recovery towards 0.6550, the Nov 25 high.
- Following this morning’s mixed UK jobs data, GBPUSD stands 0.32% higher on the session and is notably above the bull trigger of 1.3207, fresh six-month highs for the cable. This confirms the end of the recent Apr 4 - 7 correction, and highlights a resumption of the medium-term uptrend. Sights are on 1.3274 next, the Oct 3 ‘24 high.
- Standing out amid the lower US yields this week is the Swiss Franc, which remains in close proximity to its recent cycle highs. For USDCHF, last week’s 0.8099 low matched perfectly with touted support, the 76.4% retracement of the Jan 15 '15 - Dec 15 '16 recovery. This remains the key short-term support. Additionally, EURCHF is trading within 30 pips of the major double bottom support around 0.9210. A break of which will be sure to have the attention of the SNB.
- There has been less emphasis on the major pairs Tuesday, as EURUSD and USDJPY trade close to unchanged levels at 1.1350 and 142.95 respectively. Canada CPI highlights the economic calendar, alongside releases of US Empire State Manufacturing and import prices for March.
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FED: March Economic Projections: Higher Inflation, Weaker Growth, Same Rates
Mar-14 21:28
The MNI Markets Team’s expectations for the updated Economic Projections in the March SEP are below.
- The unemployment rate is likely to rise slightly for 2025 alongside a downgrade in GDP growth, while the 2025 core and headline PCE inflation projections are set to rise again. Changes to later years will likely be limited, however.
- More detail on the shift in Fed funds rate medians is in our meeting preview - we will add more color next week.
FED: Market Pricing Nearly 3 2025 Cuts As Conditions Tighten
Mar-14 21:25
Amid rising government policy uncertainty, sentiment among businesses and consumers has fallen sharply since the start of the year, while equities and the dollar have reversed their post-election rise. Overall, financial conditions have tightened, even if stress is not yet mounting, e.g. no major widening of credit spreads (the accompanying chart shows the Fed’s financial conditions impulse index but only through January).
- Combined with growth fears, this has affected expectations for the Fed’s rate path, with around 18bp more cuts expected in 2025 compared with what was seen after the January FOMC. 65bp of cuts are priced for the year as a whole. 2025 cut pricing reached 71bp before the February inflation data and 76bp before the February payrolls report.
- A rate cut is seen with near zero probability for March’s meeting, but the first full cut is just about priced for June, with a second nearly priced by September.
- Chair Powell has no reason to endorse or refute these expectations – he’s likely to be happy with a press conference that ends with little discernable change in pricing.
CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
Mar-14 21:17
- CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
