NZD: NZD/USD - Moves Lower, Eyes Pivotal 0.5850 Support Area
The NZD/USD had a range overnight of 0.5889 - 0.5966, Asia is trading around 0.5900. The pair broke through 0.5950 and traded very poorly overnight with momentum lower being added by Powell’s hawkish tone. The support towards 0.5800/50 will now become pivotal, a sustained close back below there would start to look very bearish. Strong Tech Earnings has seen risk open better bid, this could provide the NZD/USD with some respite in our session to slow the recent slide, E-Minis +0.65%, NQU5 - +0.95%.
- Bloomberg - “Meta surged after a stronger-than-expected third-quarter revenue forecast signaled its core advertising business is still growing quickly enough to support aggressive AI spending. Microsoft also jumped as sales from its Azure cloud-computing unit grew 39%, faster than analysts anticipated.”
- Bloomberg - A dollar gauge extended gains to a two-month high as Federal Reserve Chair Jerome Powell said that there is no decision on a September move and traders dialed back bets on rate cuts this year. All currencies in the Group of 10 weakened against the greenback.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.5965(NZD504m). Upcoming Close Strikes : none. - BBG
- CFTC Data shows Asset Managers again reduced their newly built longs in NZD +5034(Last +8192), the Leveraged community added slightly to their shorts last week -7328(Last -6744).
- Data/Event : ANZ Activity Outlook & Business Confidence
Fig 1: NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
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AUD: AUD/USD - Breaking Higher, Looking For Momentum To Extend
The AUD/USD had a range overnight of 0.6523 - 0.6583, Asia is trading around 0.6580. The AUD/USD found demand back towards the 0.6520 area overnight and then accelerated higher through its multiple tops around 0.6550 as the USD took another leg lower into month-end. The market will be looking for some follow through of this move signaling the potential start of a bigger move higher. CFTC data showed both Asset managers and Leveraged funds increased their AUD shorts last week most likely in the crosses. Should this break gain momentum some of these shorts could be challenged.
- (Bloomberg) - "Australian home prices climbed a fifth straight month, fueled by the Reserve Bank’s two interest-rate cuts this year and expectations of more to come."
- (Bloomberg) - “Australia started a A$2.3 billion program to encourage households to buy batteries in an effort to absorb excess renewable energy and curb price swings.”
- The AUD/USD is breaking through the top of its recent range as the pressure on the USD increases.
- 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: 0.6560(AUD874m). Upcoming Close Strikes : 0.6750(AUD1.27b July 2), 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: Melbourne Institute Inflation, Private Sector Credit
Fig 1: AUD/USD spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
NEW ZEALAND: Q2 NZIER Business Confidence Firms, But Lack Of Demand Cited
The Q2 NZIER business confidence survey showed improvement, but underlying activity remained weak. See this link for more details.
- NZIER noted: "A net 27 percent of firms expect an improvement in general economic conditions over the coming months on a seasonally adjusted basis, which was a further lift from the net 23 percent in the March quarter."
- It added: "Although the sharp interest rate cuts since August last year have boosted confidence, the effects of lower interest rates remain slow to flow through to a lift in real activity. With demand remaining soft, firms continue to be cautious about hiring. A net 12 percent of firms reduced staff numbers in the June quarter, although a net 4 percent expect to hire in the next quarter."
- On inflation/costs: "Cost and pricing indicators suggest an easing in inflation pressures in the June quarter. The easing of capacity pressures is reflected in the continued dominance of firms reporting a lack of sales as the primary constraint on their business, as opposed to those reporting finding labour as the primary constraint."
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: 95.790 @ 16:51 BST Jun 30
- 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.
