The AUDUSD opens up at 0.6885 and the NZDUSD opens up at 0.6406 this morning.
The market was still digesting news from the Fed cutting interest rates yesterday morning, with both the AUD and NZD higher. Powell’s statement was widely interpreted as the Fed needing a large increase in inflation before raising rates again, while not necessarily needing much more weakness for another cut. Therefore the market has seen this is a bit of a one way bet against the USD. The caveat here, and where we sit at the moment, is that the Fed are cutting rates for a reason, because the economy and inflation is not where they want it, and there are clouds on the horizon. When it starts raining though, is a bit harder to forecast.
Especially relevant now, for both the AUD and NZD, is the future direction for interest rates from the RBA and RBNZ respectively. The chance for a cut out of the RBA next Tuesday has dropped to 6%, while the chance for a cut out of the RBNZ on 13 November has dropped to 50%. If these drop further and the thought pattern is that the reserve banks are on hold, then we could see the AUD and NZD break out of the doldrums.
We have employment data out of the States overnight, and as ever this will be closely watched by the market and Fed alike.
Global equity markets remain mixed - Dow -0.89%, S&P 500 -0.66%, FTSE -1.12%, DAX -0.34%, CAC -0.62%, Nikkei +0.37%, Shanghai -0.36%
Gold prices are higher, up 1.5% trading at $1,515 an ounce. WTI Crude Oil prices have come off, down 1%, trading at $54.12 a barrel.
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