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On October 10th, Michael Theurer, a member of the Executive Board of the Bundesbank, stated that the recent sell-off in European bonds is a "clear warning sign" of investor anxiety regarding governments efforts to control debt. "Current developments indicate that fiscal and political uncertainty is impacting the government bond market. There is no systemic sovereign debt crisis at present, but the risks have increased significantly." The French bond market experienced a sharp decline due to heightened concerns about political and economic challenges in France. This turmoil has spread to other heavily indebted eurozone countries, fueling speculation that the European Central Bank may ultimately have to intervene to contain the shock. Theurer believes that policymakers in France and throughout the eurozone seem "very aware of the stakes." Like the International Monetary Fund, the Bundesbank has called for a medium-term strategy to review spending and prioritize investments that promote growth. While Germanys fiscal situation is much better than other European and global countries, it also faces rising debt, thus requiring urgent fiscal consolidation.Douglas Police Department, Georgia, USA: Five people were shot and killed in a residence on October 9.Russian authorities say they shot down 15 Ukrainian drones that were heading toward Moscow.October 10th - According to Ukrainian sources on October 10th, talks between Ukraine, the United States, and European countries in Miami, Florida, ended prematurely, and negotiations scheduled for the following day will not take place. US Presidential Envoy Witkov posted on social media on the 9th that representatives from the United States, Ukraine, and Europe met that day in Miami, Florida, and held "constructive" discussions on ways to ease tensions between Russia and Ukraine, end the conflict, and achieve lasting peace before winter.The governor of Ukraines Zaporizhzhia region stated that the Russian attack resulted in seven deaths.

NZD/USD Remains Under Pressure Around 0.6250 Amid Good Friday Holiday, With US NFP Data In Focus

Alina Haynes

Apr 07, 2023 11:47

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During the inactive Asian session on Good Friday, the NZD/USD maintains losses near 0.6245-40. The New Zealand traders take a breather after the price dropped the most in a month the day before. In addition to the lack of liquidity induced by the holidays, the cautious tone preceding the March US employment data also impedes the immediate movement of the quote.

 

The recent decline in price may be attributed to the market's pessimism regarding the health of the world's largest economy, the United States, as well as fears of contagion. Notably, the Fed's diminishing hawkish bets prevent the US Dollar from bolstering the risk-averse sentiment.

 

Nonetheless, fears of a recession increased after US Initial Jobless Claims improved to 228K for the week ending March 31, compared to the expected 200K and the upwardly revised 246K from the previous week. Notable is the increase in Challenger Job Cuts from 77,77K to 89,703K in the given month.

 

Since the outset, US data have been negative, especially in terms of employment and economic activity, fueling fears of a decline. Previously, US JOLTS Job Openings dropped to a 19-month low in February, and March's ADP Employment Change figures of 145K were also disappointing to markets. In addition, the US ISM Services PMI for March decreased to 51.2 from 54.5 previously and 55.1 expected.

 

In addition to US data, the Federal Reserve's (Fed) preferred economic indicator specifies recession concerns, which impact the NZD/USD exchange rate. The 'near-term forward spread,' which compares the forward rate on Treasury bills 18 months from now to the current yield on three-month Treasury bills, is the most reliable bond market indicator of an impending economic contraction, according to Fed research.

 

Domestically, the Reserve Bank of New Zealand (RBNZ) defies the prevailing trend of suspending rate hikes and rather surprises the markets by increasing the benchmark rate by 0.50 percentage points. In response to the aforementioned negative catalysts, traders became more skeptical of the NZD/USD pair's prior rally and subsequently inundated the pair with additional strength.

 

Benchmarks on Wall Street are nursing their wounds, while 10-year and 2-year US Treasury bond yields remain under pressure despite recent consolidation around 3.30 percent and 3.83 percent, respectively. Despite this, S&P 500 Futures experience modest losses amidst inactive markets.

 

Given the pause in market activity caused by the holidays, today's US employment report may cause wild market fluctuations, especially in light of recent recession fears and dismal US data. The market expects the primary Nonfarm Payrolls (NFP) number to be 240K, down from 311K previously, and the unemployment rate to remain unchanged at 3.6%.


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