"Dad, why do people trade the New Zealand currency?"
"I don't know son, I just don't know."
"I don't know son, I just don't know."
—"Reduced Risk of Negative Policy Rates Lifts Sterling and the Kiwi", November 11, 2020
From Marc to Market:
Overview: Equities in the Asia Pacific region and Europe are being led lower by the sell-off in the US yesterday. All the large Asia Pacific markets fell with Hong Kong and mainland shares setting the pace. Europe's Stoxx 600 is off nearly 1.5%, which would be the largest loss in two months. Consumer discretionary, financials and real estate sectors are off nearly 2%. US equity futures have a softer bias. European 10-year yields are mostly 2-3 bp lower, but the UK inflation shock (1.2% month-over-month and a new cyclical high in the core rate) has seen 10-year Gilt yields jump around eight basis points to near 4.25%, the highest since last October.
The greenback is mostly firmer against the G10 currencies. The Reserve Bank of New Zealand's dovish hike has seen the Kiwi drop around 1.8% and dragged the Aussie below the $0.6600 area. The UK's inflation surprise has seen sterling reverse from the $1.2475 area to push below $1.2400. The euro and yen are straddling unchanged levels. Emerging market currencies are more mixed. Of note the Hungarian forint is better bid today after easing on the central bank's rate cut yesterday. Also, the Mexican peso, which fell to around a three-week low is also better bid today, ahead of the first half of May CPI today. Gold held support near $1950 yesterday. It looks poised to test the upper end of its recent range near $1985. July WTI is extended yesterday's recovery, helped by the Saudi warning against bearish speculators and an estimated 6 mln barrel draw down of US stocks by API. A move above $75 would target this month's high near $76.50. Lastly, we note that July copper is extended its losses and is now below $360 for the first time since last November....
....MUCH MORE
