Today NZDUSD 6710/6770 NZDAUD 9140/9180
· The big Dollar made ground early in London before giving it back suddenly as Trump hit the wires discussing US rates
· Parts of a Trump interview (yet to be aired on CNBC) were released
· In particular Trump said he is not thrilled with higher rates
· “I don’t like all of this work that we’re putting into the economy and then I see rates going up”
· The Whitehouse later said the Trump respects the independence of the Fed – full interview to be aired tonight
· DXY fell from 95.45 to 94.95 in ~20 minutes before stabilising
· NZD benefitted having been under pressure since our session yesterday, bouncing from 6720 to 6760
· Equities trended lower with Eurostox -0.4, Dow -0.5%. US 10yr at 2.84 (-3)
· Philly Fed bet expectations at 25.7 (mkt 21.5) with new orders at 31.4 (last 17.9) another strong US data point
· UK Retail Sales fell 0.5% in June vs expectations of +0.2%. 17bp now priced for August for the BoE
· Today locally we’ll watch Net Migration which will help paint a picture at 10.45, but is unlikely to have a lasting impact on NZD
· We expect a seasonally adjusted net inflow of around 5500, and a general easing of the numbers
The NZD remains in a relatively narrow and stable trading range despite some outsized global risks and a general feeling of unease looking at some other asset classes. This could be due to the northern hemisphere summer, fear driving inaction, or a belief of a Central Bank put. Either way, with all of the risks (China, EM debt, chance of more hikes out of the Fed, Brexit….) we still have a lower bias in NZD but wait for a break of 6670-6700 support to confirm the next leg lower is in play.
NZDAUD feels trapped 91-92. Yesterday’s Aussie employment win will keep us capped for now.