ANZ Morning Focus: FXWW

From the FXWW Chatroom – O/night NZDUSD 6529/6585 NZDAUD 9174/9203
Today NZDUSD 6520/6560 NZDAUD 9180/9230
· Trump watch continues with more tariff headlines expected this week. “Finishing touches” being put on $200bn
· On Friday Trump said prepared to apply tariffs to an additional $267bn of imports from China
· Stocks suffered on the China headlines with S&P closing -0.22%
· But yields surged on quickest average hourly earnings growth since 2009 at 2.9% (vs exp 2.7%)
· US 10yr up to 2.94 on Friday +7bp – expect NZ rates to follow suit in the long end this morning
· Short end though will remain anchored around RBNZ expectations of potential cuts/no inflation for now
· US NFP +201k stronger than the 190k expected with unemployment at 3.9%, slightly above the 3.8% exp
· USD stronger on the data DXY up from 94.9 to 95.4 with NZD lower in sympathy to 0.6530
· AUD also hit hard testing 71c. NZDAUD flirted with 92 again but closer just below
· EU GDP Q2 data generally in line with expectations at 0.4% qoq and 2.1% yoy
· China imports +18.8%, exports +7.9%. China-US surplus hits a record at ~31bn
· We’ve had Swedish elections over the weekend with exit polls saying too close to call
FIFX’s NZD bias remains lower, helped on Friday by stronger wage growth. We think the moves in the US curve will highlight how far NZ is behind in terms of inflation. NZD could well consolidate early on this week but we continue to prefer holding a core short and fading rallies from here in NZDUSD and NZDAUD. In NZDUSD watch 6472 as the next target/fibo support. In fact looking at other currency pairs, we also think Europe is starting to see the rumblings of strong eco performance which suggests NZDEUR lower. And any positive NAFTA headlines will see NZDCAD lower. Take your pick…
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