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RBNZ surprise with 50bps rate rise

Good morning

USD weakness continues to be the key theme. EURUSD has been up to 1.0970, GBPUSD to 1.2525 and gold has enjoyed a run higher, now up at $2025/oz, not a million miles off the record highs of around $2070 made back in 2020. Weaker than expected US factory orders yesterday didn’t help the USD but it looks like it was the JOLTS jobs data that really helped USD reach new lows. JOLTS was not exactly weak but was lower than expected, with the previous reading revised lower as well. This comes ahead of Fridays US nonfarm payroll number.

RBNZ surprise with a 50bps rate rise to take their rates to 5.25% which sent NZD higher, GBPNZD trading from a high yesterday of 1.9875 to 1.9580, while AUDNZD fell from 1.0790 to just below 1.0600. GBPNZD has recovered to around 1.9700 but with RBNZ signalling the potential for further rises expect NZD to have some support.

RBAs Lowe did speak overnight, saying that although RBA left rates unchanged this week, rates had probably not yet peaked. With GBPAUD now up at 1.8600 it would seem not everyone believed him.

Trump was arrested and has pleaded not guilty to the 34 charges. Talk he may face additional and possibly more serious charges over the 2020 election and the 2021 attacks on the US Capitol.

Finland has joined NATO, prompted by the Russian invasion of Ukraine, while Sweden’s application for membership is currently being blocked by Turkey and Hungary.

Bloomberg has suggested that Canada’s Toronto-Dominion Bank could be the next bank to come under pressure, citing its exposure to a slowing Canada housing market plus its large stake on the broker Charles Schwab. I’d mentioned them back in late March after their shares plunged over fears clients were pulling money out. They remain near the recent lows. Toronto Dominion shares though seem to be holding around $60 for the time being having been down to around $55 in March. Not sure if Bloomberg are right or if they are just trying to find someone to target.

It’s a long weekend coming up in the UK with holidays Friday and Monday, and some people are certainly already in holiday mode. Just remember that Friday does see the US nonfarm payroll number, and while we are also hoping to enjoy a bit of time off there is potential for some volatility around that release, as such we’ll be watching closely just in case. No rest for the wicked…

- 09.00 EU S&P composite PMI

- 09.30 UK S&P composite PMI

- 13.15 US ADP employment

- 13.30 US goods trade balance

- 13.30 CAD Intl merchandise trade

- 14.45 US S&P services, composite PMI

- 15.00 US services ISM

- 02.30 AUS trade balance

- 02.45 China caixin services PMI

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