New Zealand Dollar, NZD/USD, Risk Appetite, China, Yuan Loans – TALKING POINTS
- APAC markets ready for risk-on trading after US CPI dragged on Fed bets
- China’s new Yuan loans data for July is a potentially high-impact event
- NZD/USD surged overnight but trimmed strength at the 100-day SMA
Thursday’s Asia-Pacific Outlook
Asia-Pacific markets are looking at a higher open after risk assets surged overnight. The US consumer price index (CPI) for July disappointed expectations, falling to 8.5% in July on a year-over-year basis. That was down from 9.1% y/y in June and below the 8.7% consensus forecast. The US Dollar plunged after the news, with traders buying short-term Treasuries on bets that the inflation data would cool the Federal Reserve’s rate hiking path.
The Japanese Yen was one of the biggest winners against the USD, with USD/JPY falling over 1.6%. The Swiss Franc, Swedish Krona, and the British Pound saw gains north of 1% versus the Greenback. However, gold traders were not as optimistic. XAU saw a modest drop, although prices remain around 1% higher for the week. Silver prices climbed modestly, while copper saw bigger gains.
The New Zealand Dollar, a high-beta currency, surged nearly 2% against the USD. The US CPI miss assuaged global recession fears. New Zealand’s commodity exports would benefit if the global economy escapes a recession. That, and a hawkish RBNZ, helped underpin the Kiwi Dollar’s fundamental posture. The RBNZ is expected to hike its official cash rate (OCR) by 50-basis-points at its policy meeting next week. The island nation’s visitor arrivals for June increased at an 83.5% y/y pace, up from 26.3% in May.
China ended its military drills around Taiwan, removing geopolitical tensions from the market. The British embassy in China on Wednesday tweeted that Britain and China are set to resume passenger flights, a bright sign that suggests Chinese policymakers are shifting away from the country’s “Zero-Covid” policy. China’s new Yuan loans for July may cross the wires as soon as today. According to a Bloomberg survey, analysts expect to see bank lending drop to 1.1 trillion Yuan, down from 2.81 trillion in June.
Notable Events for August 11:
Singapore – GDP Growth Rate Final (Q2)
Australia – Consumer Inflation Expectations (August)
Singapore – Current Account (Q2)
Thailand – Consumer Confidence (July)
China – Vehicle Sales YoY (July)
NZD/USD Technical Outlook
NZD/USD put in a big move, launching from the 23.6% Fibonacci retracement before trimming gains at the 38.2% Fib. The 100-day Simple Moving Average (SMA) is tracking just above that Fib level, adding a layer of resistance to the Fibonacci. Meanwhile, the 20-day SMA is on track to cross above the 50-day SMA, a sign that the recent strength may continue. A break above resistance would threaten the June high at 0.6576. Alternatively, a pullback may see prices return to the 23.6% Fib.
NZD/USD Daily Chart
Chart created with TradingView
— Written by Thomas Westwater, Analyst for DailyFX.com
To contact Thomas, use the comments section below or @FxWestwater on Twitter