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NZD: NZD/USD Rallies As 50bps US Rate Cut Chances Rise

NZD
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  • The NZD/USD rallied 0.73% on Thursday to 0.6182, as the USD fell on the back of a WSJ article from Nick Timiraos where he quoted ex-Powell adviser Jon Faust saying it's a "close call" between 25bp and 50bp, pricing has shifted to around 20% probability of a 50bp cut, vs <10% earlier today, basically reversing the pricing out seen after yesterday's stronger-than-expected core CPI data.
  • Overnight, PPI final demand was slightly-above-expectations at 0.2% vs 0.1%, although this was offset by down-revisions to prior, weekly claims slightly higher than expected: 230k (cons 227k) in the week to Sep 7 after a marginally upward revised 228k (initial 227k).
  • The pair broke back above the 20-day EMA, and now eyes 0.6200. The 14-day RSI is now 55, while the MACD indictor is printing decreasing red bars, indicting momentum has swung back to bullish.
  • Initial support is 0.6162 (20-day EMA) and below here the 0.6090/5 (100 & 200-day EMA). We are currently testing initial resistance at 0.6186 (Sep 9 highs) and while 0.6200 (Round number) becomes the next major resistance.
  • NZ houses are taking longer to sell, with the median time reaching 50 days in August, the highest since April 2023 with house prices flat in August after five months of declines, annual prices dropped 0.7%, the first yearly fall since November.
  • RBNZ dated OIS has cooled 2bps for the October meeting, with 34.5bps of cuts now priced. Looking further out the curve, we trade slightly cooler for the Feb & April meetings, but firmer in May and July.
  • The NZ-US 2yr swap spread was little changed on Thursday at 19bps
  • Expiries: 0.6355 ($200m) Sept 12, 0.6003 ($396.54m) Sep 17
  • Today, BusinessNZ Manufacturing PMI at 0830 AEST / 0630 HKT
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  • The NZD/USD rallied 0.73% on Thursday to 0.6182, as the USD fell on the back of a WSJ article from Nick Timiraos where he quoted ex-Powell adviser Jon Faust saying it's a "close call" between 25bp and 50bp, pricing has shifted to around 20% probability of a 50bp cut, vs <10% earlier today, basically reversing the pricing out seen after yesterday's stronger-than-expected core CPI data.
  • Overnight, PPI final demand was slightly-above-expectations at 0.2% vs 0.1%, although this was offset by down-revisions to prior, weekly claims slightly higher than expected: 230k (cons 227k) in the week to Sep 7 after a marginally upward revised 228k (initial 227k).
  • The pair broke back above the 20-day EMA, and now eyes 0.6200. The 14-day RSI is now 55, while the MACD indictor is printing decreasing red bars, indicting momentum has swung back to bullish.
  • Initial support is 0.6162 (20-day EMA) and below here the 0.6090/5 (100 & 200-day EMA). We are currently testing initial resistance at 0.6186 (Sep 9 highs) and while 0.6200 (Round number) becomes the next major resistance.
  • NZ houses are taking longer to sell, with the median time reaching 50 days in August, the highest since April 2023 with house prices flat in August after five months of declines, annual prices dropped 0.7%, the first yearly fall since November.
  • RBNZ dated OIS has cooled 2bps for the October meeting, with 34.5bps of cuts now priced. Looking further out the curve, we trade slightly cooler for the Feb & April meetings, but firmer in May and July.
  • The NZ-US 2yr swap spread was little changed on Thursday at 19bps
  • Expiries: 0.6355 ($200m) Sept 12, 0.6003 ($396.54m) Sep 17
  • Today, BusinessNZ Manufacturing PMI at 0830 AEST / 0630 HKT