ECONOMIC DATA OF THE DAY

Time	CY	Indicator	Forecast	Previous
05:00	NZD	RBNZ Official Cash Rate	2.00%	2.25%
09:00	KRW	BoK 7-Day Repo Rate	1.25%	1.25%
20:30	USD	Initial Jobless Claim	265K	269K

(Source: FabTrader)

OVERNIGHT NEWS

• NEW ZEALAND: 
• RBNZ dropped the Official Cash Rate as expected 25 bps to 2.00%. Reserve Bank Governor Graeme Wheeler said that 
• “Our current projections and assumptions indicate that further policy easing will be required to ensure that future inflation settles near the middle of the target range”
• The high exchange rate is adding further pressure to the export and import-competing sectors and, together with low global inflation, is causing negative inflation in the tradables sector
• This makes it difficult for the bank to meet its inflation objective. A decline in the exchange rate is needed.
• US: 
• The Budget Deficit was little changed in July at $115 Bn. . In the 12 months through July, the deficit equated to 2.6% of GDP, down from the 2.8% rate through June.

FOREIGN EXCHANGE (INDICATIVE RATES)

Currency	Last	% Change	Overnight Range
DXY	95.53	-0.18%	95.442 – 95.912
EURUSD	1.1189	0.30%	1.1139 – 1.119
USDJPY	101.1	-0.14%	100.97 - 101.56
AUDUSD	0.7715	0.21%	0.7683 – 0.7756
GBPUSD	1.3019	-0.44%	1.2991 - 1.3094

(Source: FabTrader)

Commodities (INDICATIVE RATES)

Currency	Price USD	% Change	Overnight Range
Gold	1347.06	0.35%	1340.87 - 1357.37
Silver	20.27	1.18%	19.906 - 20.4909
Oil (BRENT)	43.81	1.36%	44.07 - 49.22
Oil (WTI)	41.45	2.72%	41.5 - 43.39

(Source: Bloomberg and Saxo)

COMMODITIES

Precious Metals: Palladium futures surged to one-year high, as strong vehicle sales in China implying strong demand for the car-making metal. Despite the prices already gaining more than 30% ytd, with resistance of $725 broken, potential upside may still be seen.

Oil: WTI and Brent futures fell sharply after EIA reported U.S. crude inventories gained 1.1 million barrels, third straight week of builds that surprised the market. Saudi Arabia said that its oil output hit a record in July, with production at 10.67 million bbl. Glut concerns may continue to pressure on oil prices before September OPEC meeting, with high possibility WTI sliding back below $40.

FOREX NEWS

• The market was obviously disappointed with RBNZ decision to lower the rates by only 25 bps and NZDUSD rallied 140 pips before coming back below the 0.7300 level. AUDNZD collapsed on that triggering a lot of stops to reach the 50d MA at 1.0564
• One of the biggest mover yesterday was NOK following the much stronger than expected CPI numbers (+0.6% MoM, Exp. -0.1% and +4.4% YoY vs Exp of 3.8%). USDNOK collapsed on the news from the 200d MA at 8.4895 to 8.2733. There is no close support in USDNOK before 8.1150. EURNOK had a similar move and is trading at the lows of the year close to 9.2000 which should be the initial support.
• USDJPY pressure lower continued all day yesterday with the market having in sight the 100 level
• In Emerging Markets, it was a fight to get yield and a proper risk on with all the Asian  currencies rallying and breaking major USD support. USDKRW traded below 1100, USDTWD 1M broke the 31.00 level. USDMYR traded briefly below 4.000

Dollar Falls, Bonds Rise on Bets Fed to Move Slowly; Kiwi Jumps

The dollar weakened, boosting metals prices amid gains in government bonds, as the idea that U.S. policy makers are in no rush to raise interest rates solidified. U.S. stocks dropped with crude oil.

The greenback fell against major peers as currencies of commodity-exporting nations rallied with industrial metals. New Zealand’s dollar climbed after the country’s central bank signaled a more gradual easing path than some investors had anticipated as it cut rates to a fresh record low. Treasuries helped extend the global bond rally as the U.S. sold 10-year notes at their lowest yield in four years. Oil’s slide spurred a selloff in energy shares that dragged the S&P 500 Index down 0.3 percent from near its all-time high.

Currencies

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, fell 0.4 percent as of 4 p.m. in New York, its lowest point since June 23.

The Kiwi kicked off Thursday trade with a surge of as much as 1.9 percent, touching its strongest level since May last year after the Reserve Bank of New Zealand reduced rates by 25 basis points, or 0.25 percentage point, to a record-low 2 percent. On Wednesday, the futures market indicated traders were certain of a reduction and even saw 20 percent odds for a 50 basis point drop.

Norway’s krone climbed 1.5 percent on Wednesday, fueled by a surge in inflation that cast doubt on further rate cuts there. The MSCI Emerging Markets Currency Index rose a fifth straight day, climbing to its highest level in 13 months. The South Korean won climbed to its strongest point since May 2015, while Brazil’s real extended the best rally among major currencies this year to 27 percent.

“As long as the developed-market central banks remain dovish, high-yield currencies could continue to perform well,” Stephen Jen, a former economist at the International Monetary Fund and now chief executive officer at Eurizon SLJ Capital Ltd. in London, said in a note to clients dated Aug. 5.

The pound added 0.1 percent to $1.3010, ending a five-day run of losses sparked by expansion of the Bank of England’s quantitative-easing plan.

Commodities

Gold climbed as the dollar’s weakness bolstered the appeal of metals. Palladium touched a one-year high as stronger Chinese car sales added to concerns over insufficient supply of the commodity used to reduce pollution from vehicles. Silver also gained, as copper led a bounce in industrial metals.

West Texas Intermediate crude futures for September delivery dropped 2.5 percent to settle at $41.71 a barrel on the New York Mercantile Exchange. Total volume traded was 25 percent above the 100-day average. Crude inventories in the U.S. rose by 1.06 million barrels, according to an Energy Information Administration report. Analysts surveyed by Bloomberg had forecast a 1.5 million-barrel decline.

“Refineries are cutting back on crude runs and as a result inventories are rising again,” said Craig Bethune, a fund manager at Manulife Asset Management Ltd. in Toronto who focuses on energy and natural resources investments. “Refiners are doing what they have to do because gasoline and diesel supplies are so high. They’ll soon be performing seasonal maintenance, which will cut runs further.”
Read More at www.bloomberg.com