Arguably the biggest news of the day came out of New Zealand whose main milk cartel, Fonterra, forecasted significantly lower future prices for their creamy product from $7.00 to $6.00 per kgMS. While that calculation may not mean much to an everyman like you or I, it represents a total drop in payments to Kiwi farmers of about $1.6 billion; and from the peak price of $8.40 last season, it represents a loss of around $4.3 billion or 1.9% of New Zealand’s GDP. Needless to say, the Reserve Bank of New Zealand most likely won’t be raising interest rates again at their next monetary policy decision as they already acknowledged last week. In response, the NZD/USD tumbled about 50 pips and threatened perceived stops below the 0.85 level, but is currently hovering there as I go to press. If it were to break, a more significant fall could be in order as the last vestiges of NZD bulls abandon their posts.
Providing even more reason for a positive run for the USD and equities in general was the Conference Board’s US Consumer Confidence which increased for the third consecutive month and reached its highest level since October 2007. This was in contrast to the Preliminary UM/Reuters Consumer Sentiment report of 11 days ago that did improve upon the previous month’s result, but doesn’t appear nearly as optimistic as the CB’s report. The Revised version of UM/Reuters Consumer Sentiment will be released on Friday well after the trade attention gathering Non-Farm Payroll report could render the UM figure as impotent; however, a higher reading than the initial could signal a renewed fervor in the US population leading to potentially stronger Retail Sales figures in early August.
Circling back around to European data releases, the UK garnered most of the subdued attention as Net Lending to Individuals declined to 2.5B from 3.0B previous, and Mortgage Approvals jumped to 67k from 62k previous. The GBP/USD initially spiked back toward 1.70, where it had a difficult time transgressing yesterday, only to fall back toward 1.6940 as USD strength came to dominate. The EUR/USD also fell victim to USD domination, getting to within 10 pips of the 1.34 barrier. Much like the Kiwi, if the euro were to tumble below that demarcation line, a more significant move may be in order as contrarians scramble out of their long euro positions.
Recommended Content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.