HiFX Morning Update, July 27 2016

HiFX Morning Update, July 27 2016

NZDUSD 0.7045 0.8%
NZDEUR 0.6411 0.8%
NZDGBP 0.5362 0.8%
NZDJPY 73.69 0.4%
NZDAUD 0.9379 0.2%
NZDCAD 0.9283 0.5%

The NZDUSD opens at 0.7045 this morning.

The NZD rallied 0.7% late yesterday afternoon after comments from Japan’s Finance Minister Aso, and the Kiwi held firm overnight.

The Japanese Yen had its sharpest one-day gain against the USD since the day after the Brexit vote. Finance Minister Aso said the size of any economic stimulus is not yet decided and monetary policy is in the hands of the Bank of Japan.

The U.S. Richmond Manufacturing Index improved in July up 14 from -4 to +10. New orders and shipments increased this month, while backlogs flattened. Employment rose modestly, while firms continue to report wage increases. Prices of raw materials and finished goods rose at a slower pace in July, compared to last month. Manufacturers looked for better business conditions during the next six months.

July data suggested that growth in the U.S. service sector remained muted, with activity rising at the weakest pace in the current five-month sequence of expansion. A slower increase in new business was also recorded. On a more positive note, the rate of job creation picked up slightly and business sentiment improved markedly from June’s record low.

At 50.9 in July, the seasonally adjusted Flash U.S. Services PMI Business Activity Index was down from 51.4 in June and pointed to a slight expansion in activity.

The Conference Board Consumer Confidence Index, which had increased in June, was relatively unchanged in July. The Index now stands at 97.3, compared to 97.4 in June.

U.S. Federal Funds Rate and FOMC Statement 6am NZ time tomorrow morning. Only a 12% probability of a hike has been factored in by the markets.

Global equity markets were mixed overnight: Dow -0.23%, S&P 500 -0.04%, FTSE +0.21%, DAX +0.49%, CAC +0.15%, Nikkei -1.43%, Shanghai +1.24%.

Gold prices were up $4 or 0.3% overnight to $1,320 an ounce, WTI Crude Oil fell 0.5% to $42.92.

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