NZD/USD Little Changed After Risk Assets Sell-Off On Soft US ISM

The NZD finished the session little changed at 0.5949, we did trade higher into US data, but the weak US ISM Mfg reports saw risk assets sell-off, it was a substantial miss coming in at 43.4 vs 49.2 expected which was the lowest since Jul 2020 and excluding the pandemic we were back at the lowest since 2009.

• The NZD/USD hit its highest levels since July 21st overnight of 0.5980, just falling short of testing the 20-day EMA at 0.5986, before paring gains on the ISM report.
• The pair has opened slightly weaker, at 59.45
• Looking at technical levels, a break below Thursday's lows of 0.5938, would be needed to tests 0.5900 (round number) Initial resistance is 0.5986 (20-day EMA),
• The OIS market is pricing a 65.5% chance of a cut into the August meeting, while we have softened into year-end with a cumulative 78bps of cuts now priced, down 1bp.
• The NZ-US 2yr swap spread continues to unwind the move made earlier in July, up another 8bps on Thursday to 10bps. On July 26th the spread was -16bps
• Expiries: 0.5975 ($502.08m) for the August 2nd NY Cut
• Today the calendar is empty, with focus turning to Commodity prices on Monday and Employment data on Wednesday