Mixed Markets Ahead of Key Vote
Markets had a mixed day yesterday as investors prepare for the arduous process of lawmakers in the US getting the debt deal through Congress. Some cracks are showing in earlier optimism as hardliners on both sides of the house put forward some objections. The major US indices failed to give any direction to the Asian market with the Dow closing down 0.15%, the S&P flat and the Nasdaq finishing up 0.32% aftermarket darling Nvidia jumped again to join the trillion-dollar club. The dollar had a whippy day but largely traded within recent ranges and treasury markets steadied.
The Flightless Bird’s Wings have been Clipped.
The Kiwi dollar has taken a pounding over the last week ever since the RBNZ raised rates at its last meeting. The signal from the Reserve Bank that they feel they are now finished in terms of rate hikes for this cycle has knocked the currency hard, it’s dropped over 5% against the greenback, 3.5% against the Euro and over 2.5% against its cross Tasman cousin the Aussie dollar. The move against the dollar has come over a period when we have seen rate hike expectations in the states increase and therefore it has been the perfect interest rate differential storm for Kiwi shorts. But central bank observers will be paying close attention to what occurs in the land of the long white cloud as the RBNZ has been seen as a good forward indicator in the past and once again they may be seen to be leading the way as data starts to turn globally.
Investors Look for Data and Political Updates to Move Markets
Investors are expecting volatility to increase further today as the macroeconomic calendar picks up pace alongside the continuous updates in the US on the debt ceiling deal and its progress to become written into law. Traders have already seen mixed indicators in the Asian session with Australian CPI data coming out stronger than expected but Chinese PMI numbers returning a weaker-than-expected result. Market players will be turning their focus to Germany during the European session with the latest Prelim States CPI’s due out, the ECB stability report is also set to be released today. Into the North American session, the Canadian GDP data is due for release with expectation sitting at a 0.1% decline and this is followed later in the day by the US Jolts Job Openings numbers.
