Thursday 11th June: European Open Briefing

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Thursday 11th June: European Open Briefing 1

Global Markets:

  • Asian stock markets: Nikkei up 1.40 %, Shanghai Composite lost 0.20 %, Hang Seng rose 0.80 %, ASX rallied 1.40 %
  • Commodities: Gold at $1186 (-0.05 %), Silver at $15.98 (+0.15 %), WTI Oil at $61.20 (-0.40 %), Brent Oil at $65.55 (-0.10 %)
  • Rates: US 10 year yield at 2.48, UK 10 year yield at 2.12, German 10 year yield at 0.98

News & Data:

  • RBNZ cuts main rate by 25 bps to 3.25 %
  • Australia Employment Change 42k, Expected: 11k, Previous: 13.7k
  • Australia Unemployment Rate 6.0 %, Expected: 6.2 %, Previous: 6.1 %
  • Australia MI Inflation Expectations 3.0 %, Previous: 3.6 %
  • RBNZ: Further Easing May Be Appropriate, Depends On Data
  • RBNZ: Rate Cut Appropriate Given Low Inflation Pressure
  • RBNZ: NZ$ Remains Overvalued
  • RBNZ: Sees Inflation Accelerating As Currency Declines
  • RBNZ Governor Wheeler: NZD Still Has A Significant Way To Fall
  • RBNZ Governor Wheeler: Market Forecasts See One Further Rate Cut

Markets Update:

The New Zealand Dollar fell sharply overnight, after the RBNZ cut rates unexpectedly. The statement from the central bank was very dovish, suggesting another 25bps rate cut will follow soon, perhaps even next month. Governor Wheeler said that the NZD remains overvalued has still a significant way to fall. NZD/USD fell from 0.72 to a low of 0.7020 and later extended losses to 0.7010. Immediate support seen at 0.70, but it seems that is just a matter of time until we see the pair trading with a .69 handle. The big moves were seen in the cross pairs – GBP/NZD rallied more than 600 pips to a high of almost 2.2150, while AUD/NZD took out the 1.10 resistance level and EUR/NZD broke through 1.60. The outlook for the Kiwi Dollar remains negative and further losses against the other major currencies highly likely.

Overnight, we also got Australian employment data. The headline number beat expectations, arriving at 42,000 vs 11,000 expected. AUD/USD rallied from 0.7710 to 0.7790 and has settled in a 0.7760-75 range for the past 3 hours. Decent resistance seen at 0.7820 and a break above would pave the way for a 0.80 test.

Upcoming Events:

  • 07:45 BST – French CPI
  • 08:30 BST – Swedish CPI
  • 13:30 BST – US Retail Sales
  • 13:30 BST – US Initial Jobless Claims
  • 15:00 BST – US Business Inventories
  • 16:15 BST – Bank of Canada Governor Poloz speaks

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