RBNZ laid down a large dovish marker

Pre Jackson Hole house keeping

The dollar’s been quietly flexing this week, not with the drama of a breakout but with the kind of steady bid that sneaks up on you. Position squaring ahead of Jackson Hole explains part of it, but there’s also that sense of the greenback reclaiming a sliver of its old safe-haven swagger. When equities roll over and commodities sag, the dollar has a way of slipping back into the role of market insurance, whether analysts agree or not.

Across the Atlantic, the Ukraine headlines are still more theatre than substance. European leaders hailed “breakthroughs,” but the market isn’t biting. Until Washington makes clear what level of backing it’s prepared to underwrite — and until Putin signals how far he’s willing to redraw the red lines in equitable fashion — the euro narrative won’t be driven by geopolitics but by the Fed’s hand on the tiller.

The real FX spark came from Wellington today. The RBNZ didn’t just resume its rate cut cycle with 25bps; it laid down a marker. The split vote — two members even pushing for 50bps — and the explicit signal of two more cuts by year-end was the tell. That’s the canary in the coal mine moment. Traders didn’t expect such an unambiguous dovish pivot, and when the smallest bird in the room starts gasping, the rest of the central-bank aviary takes notice. Sometimes it’s the RBNZ that blinks first, but the reverberations ripple outward — even the ECB has to listen when a fellow banker admits growth is stalling and neutral policy may be too high.

The kiwi paid the price, off more than 1% against the dollar, dragging NZD/USD toward 0.5800 while AUD/NZD vaulted above 1.1050. Commodity peers (AUD, NOK) wobbled in sympathy as tech stocks and oil added to the gloom, while JPY and CHF quietly gathered the haven bid.

And then there’s the euro. Despite the dollar’s modest revival, the dip-buying script hasn’t been torn up. Jackson Hole may steal the spotlight for now, but the real hinge is payrolls — the asymmetric risk still leans toward the Fed being nudged into pencilling in another cut. Layer on the possibility of peace in Eastern Europe that eases geopolitical risk, and lower energy prices that act like a quiet tailwind for Europe, and the euro’s downside remains cushioned.

But conviction here is not free. Negative carry is still the toll at the gate, the rent you pay to sit at the table. That means it’s not about blindly scooping every dip, but stalking them — picking your spots with patience and precision. The euro has insurance beneath it, but you have to decide if the cost of carrying that insurance is worth the trade.. In other words, the negative carry is the rent you pay to sit at this table, a tax on patience that punishes imprecision. You don’t buy every dip; you stalk them. It’s a sniper’s trade, not a scattershot one, and timing the big pivot matters more than bravado.

So as Jackson Hole takes center stage, the market feels caught between the dollar’s quiet and unexpected safe-haven hum, the kiwi’s collapse as canary-in-chief, and the euro’s tug-of-war between expensive carry and asymmetric Fed risk. This is less about chasing momentum and more about listening for the warning songs in the coal mine — because sometimes, the smallest bird tells you the most.

Market wrap: US tech’s slip turns global: Markets limp into Jackson Hole

Global markets buckled midweek under the weight of a US tech-driven rout, a reminder that when the generals stumble, the infantry rarely holds. Wall Street’s stumble bled across time zones, leaving Asia heavy and Europe unable to shake the funk. The dollar, meanwhile, found its legs again — not roaring, but striding steadily as traders squared risk ahead of Powell’s coming sermon at Jackson Hole.

In Europe, the STOXX 600 sagged, with Germany nursing the deeper bruise, while London slipped as inflation printed its hottest in a year and a half. Across Asia, it was the chip havens of Taiwan and Korea that wore the scars, the high-beta darlings dumped as if portfolios were being cleansed before the Fed’s curtain call. There was no single spark, just a crowded theatre where someone quietly reached for the exit — risk de-grossed, momentum unwound, the tape sagged under its own leverage.

Washington’s policy hand only thickened the unease. Whispers swirled of the U.S. government eyeing equity stakes in Intel and peers under the banner of “strategic partnership” — subsidies wrapped in shareholder contracts. Add to that the bizarre dance with Nvidia: permission to sell chips into China but with Uncle Sam skimming revenue off the top. Interventionism dressed up as industrial policy, but to markets it looks more like Washington playing portfolio manager with taxpayer money. For an equity tape already wary of tech’s long leash, this was hardly confidence-building.

Commodities offered little refuge. Oil clawed back a sliver of Tuesday’s drop, Brent back above $66, U.S. crude a notch under $63. The move was less conviction, more noise — traders toggling between sanctions risk and peace whispers, knowing full well that the Russia-Ukraine script has been rewritten too many times to bet the farm on any line. Trump hinted at air support for Kyiv but ruled out boots on the ground. The language, as ever, was part carrot, part shadow-boxing — enough to keep crude bid on the headline, but not enough to change positioning.

And so the focus narrows to Wyoming. Powell takes the stage at Jackson Hole on Friday, with markets already scripting the act: a cut in September priced nearly to the decimal, further easing sketched by year-end. Yet the data still spits mixed signals — CPI temperate, PPI hot and the labour holding up but fraying at the edges. The dilemma is classic: ease too soon and risk fanning the embers of inflation, hold too long and risk being caught with a job market already rolling over. Traders don’t care about the theory — they care about the timing. And right now, the strip is priced as though Powell will blink.

Markets often rehearse price perfection. But perfection rarely survives first contact with reality.