Kiwi tops worst performing major currencies as unemployment rises
The New Zealand dollar fell in European trade against a basket of major rivals, extending losses for the second straight session against US dollar and plumbing a five-week trough, and becoming the worst performing major currency after weak unemployment data.
Such data bolstered the case the RBNZ won't issue additional interest rate hike, and that interest rates have peaked at 5.5%.
NZD/USD fell 0.9% to 0.6094, the lowest since June 30, with a session-high at 0.6169.
The New Zealand dollar fell 0.9% against US dollar on Tuesday, the fourth loss in five days as dollar powers up against major rivals.
Worst Performing Currency
Kiwi has topped the list of worst performing major G8 currency followingg New Zealand labor data
Kiwi plumbed a five-week trough against US dollar, and a week low against euro and Swiss franc, and a three-year nadir against the pound, while losing 1.2% against yen, and 0.8% against Canadian dollar, and 0.5% against Aussie.
New Zealand Unemployment
Data showed New Zealand unemployment rose 3.6% in the second quarter of the year, missing estimates of 3.5%, and up from 3.4% in the first quarter.
Such data showed the labor sector is loosening up with the need for higher interest rates waning considerably.
The RBNZ
At the latest July meeting, the Reserve Bank of New Zealand maintained interest rates unchanged as expected at 5.50%, the highest since October 2008.
The bank is convening against on August 16 to discuss policies, expected to maintain current interest rates unchanged for the second meeting.
Wall Street heads lower as August opens up
Most US stock indices declined on Tuesday amid the release of the second quarter financial results by major corporations.
In July, Dow Jones marked a monthly profit of 3.4%, while S&P rose 3.1%, as NASDAQ gained 4.1%.
On trading, Dow Jones stabilized at 35,565, while S&P 500 fell 0.4%, or 17 points to 4,572, while NASDAQ lost 0.5%, or 66 points to 14,280.
Palladium declines by over 4% as dollar strengthens
Palladium prices fell on Tuesday as dollar rose against most major rivals while markets process latest policy decisions by global central banks.
US inflation clocked in the slowest read in two years, raising hopes the Fed might be ending the current cycle of policy tightening soon, which in turn pressured the dollar.
Chinese authorities also vowed recently to boost the struggling real estate market, in turn boosting minerals demand.
Recent weak industrial data in China weighed on sentiment considerably with manufacturing activities slowing down for the fourth straight month in China, while services and construction approach a contraction.
As for the US, hopes are increasing for controlling inflation without causing a recession in the world's largest economy as recent data showed a resilient labor market and strong corporate profits.
Otherwise, the dollar index rose 0.5% as of 16:51 GMT to 102.3, with a session-high at 102.3, and a low at 101.8.
Palladium prices fell 4.1% as of 16:52 GMT to $1,225 an ounce.
Dollar extends gains to three-week high ahead of important data
The dollar rose in European trade on Tuesday against a basket of major rivals, extending gains for the fourth straight session and hitting three-week highs following bullish remarks by Fed officials and after local banks reported more stringent credit standards.
The gains ahead of important US data on job opportunities and manufacturing for July, which will help determine the likely path ahead for policies.
The Index
The dollar index rose 0.5% to 102.40, the highest since July 10, with a session-low at 101.85.
The index closed up 0.2% yesterday, the third profit in a row after bullish remarks by a Fed officials.
Remarks
Chicago Fed President Austin Goolsbey said the Fed is on track for reducing inflation without causing recession, and will monitor data to determine whether further policy tightening is needed in September.
US Banks
Earlier Fed data showed that local banks reported more stringent credit standards with demand on loans declining from both companies and consumers in the second half of the year.
The survey showed that US banks expect even more stringent standards for the rest of 2023, showing the impact of US interest rates on the economy.
US Rates
Pricing for a 0.25% US interest rate hike currently stands at 20%.
Data
Investors await a batch of important US data later today, including data on US manufacturing and job opportunities.
US ISM manufacturing PMI is expected up slightly to 46.9 in July from 46.0 in June.