Market Update – May 24 – NZD Roiled, Sterling in Focus

May 24, 2023

The USDIndex moved up to 103.50 on safe haven Dollar buying as US debt ceiling talks made little progress, with no new talks scheduled & no deal in view. US stocks lost over -1% and Yields also cooled as Treasuries got a lift. Global PMIs showed weakness but US Services were remarkably robust. Overnight the NZD tanked (-1.45%) as the RBNZ raised rates by 25 bp but signalled the end of the hike cycle. Asian stocks also fell, particularly in mainland China. Saudi Arabia warning speculators on the future of production and prices.

Overnight – GBP Inflation Dump – consumer prices hotter than expected, 8.7% vs 8.2% & 10.1% prior, CORE increases to 6.8% from 6.2% and RPI 11.4% vs. 11.1% from 13.5%. PPI shrunk to 6.0% from 8.3%.

FX – USDIndex spiked to 103.50, back to 103.30 now but holds the bid for a 10th day. EUR tested into 1.0760 again and holds below 1.0800 at 1.0785. JPY breached & holds 138.50, topping at 138.85 (high from November 2022) once again and holds back at 138.50 now. Cable spiked to 1.2466 following the inflation & retail sales data. The pair is back to 1.2450 now up from 1.2375 lows on Tuesday.
Stocks – US markets closed much lower (-0.69% to -1.26%). TSLA -1.64%, APPL -1.52%, GOOGL -2.00%, MSFT –1.84%. US500 (-1.12%) closed -47.05 pts at 4145, FUTS are trading at 4155, below the key resistance at 4175.

Commodities – USOil – Futures rallied from $70.70 again yesterday and spiked to test the $74.00 zone following hawkish comments from Saudi Arabia regarding further output cuts. Gold – has moved back to the $1975 level, once again finding buyers at the key $1950 zone.
Cryptocurrencies–BTC pushed to test $27.5k (21-day EMA) yesterday before rejecting the area and moving to $26.75k now.

Today – German Ifo, FOMC Minutes (May), Speeches from BOE’s Bailey, ECB’s Lagarde & Fed’s Waller.

Biggest Mover @ (06:30 GMT) GBPNZD (+2.05%). From Monday’s test of 1.9775 lows the pair has rallied over 2.0250 following the RBNZ. MA’s aligned higher, MACD histogram & signal line positive & rising, RSI 92.00 very OB & flat, H1 ATR 0.00476, Daily ATR 0.0161.

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Stuart Cowell

Head Market Analyst

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