New Zealand dollar marks 3 month high as new resistance point emerges

Key Movers

There is ample to digest this morning with the ECB and Danish Central Bank electing to cut rates by 25 basis points overnight. The ECB is now the fourth major central bank to enter an easing cycle, following the Bank of Canada move on Wednesday. The move was widely forecast and as such, our attentions shifted directly to commentary from the bank's Governing Council as to the timing and trajectory of future cuts. The GC noted domestic price pressures remain strong as wages are elevated and it expects inflation to remain above target well into 2025, raising headline and core inflation forecasts. They expect to keep policy rates sufficiently restrictive and will be very much data dependent, refusing to give any guidance as to future rate adjustments. With it now unlikely, the bank will issue a 2nd cut in July or September, as previously forecast the euro enjoyed a modest boost pushing back toward 1.09, a move consolidated after a larger than expected increase in US jobless claims. An upward trend in unemployment claims supports calls the US labour market is softening and allowed markets to extend treasury yield losses. The DXY index is down 0.2% and looks set to break back below 104, a level it hasn’t breached in two months.

Our attentions turn now to US non-farm payroll data for May. We expect 185,000 new jobs will have been added to the economy, while the unemployment rate should remain steady at 3.9%. A softer print will likely exacerbate this weeks Treasury yield sell off and firm bets for a Fed rate cut in September, weighing on the USD into the weekend.