Another quiet summer holiday trading session sees little change in asset prices. The NZD continues to underperform, albeit changes are fairly microscopic.
There has been little tradeable news reported, a light economic calendar and the market has been focused on the upcoming Jackson Hole symposium. Traders are sitting on their hands and price movements have been minimal. In economic news, the second estimate of UK GDP for Q2 was unchanged at 0.3%. US existing home sales were weaker than expected, falling to an 11-month low, but on a more positive note, weekly jobless claims figures remained near a four-decade low and the weekly consumer comfort index rose to a 16-year high. In NZ, trade data showed a rare and unexpected surplus for July, driven by stronger exports, but none of these releases had any notable market reaction.
There have been a few headlines on the US debt ceiling debacle. Trump blames Republican leaders for the “mess”. On this tweet he has a good point, as the debt ceiling could have been added to a popular veterans’ bill, but Conservatives in the house demanded that steep spending cuts accompany the bill. Ratings agency Moody’s Investor Services said that a missed debt payment would have “negative rating implications”. The Bipartisan Policy Centre estimates that the government could run out of cash on 2 October to pay for an obligation to the Military Retirement Fund. But the more important date is closer to mid-October when debt obligations are due. The interest rate on Treasury bills maturing 12 October rose 5bps and are up 10bps over two days, reflecting the unthinkable possibility of a missed payment.
The NZD sits at 0.7215 this morning, about 10pips lower from the same time 24 hours ago. There was another probe below the 0.72 mark, 0.7192 being the low, but that didn’t last for long. The currency is down on most of the key crosses, but movements have been less than 0.2%. NZD/AUD sits at 0.9130, NZD/EUR at 0.6110 and NZD/GBP at 0.5635.
JPY has been the biggest mover, but as we’ve seen over past two weeks, USD/JPY continues to find support in the high 108s. USD/JPY is up 0.3% for the day to 109.40 and NZD/JPY is up 0.2% to 78.95.
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