NZ data up ahead
A few quarterly data points to look forward to this morning at 8.45am AEDT surrounding NZ employment. In the release, markets will look to focus on labour costs, unemployment and job growth. Forecasts are as follows:
We think this announcement should steer NZDUSD bias for the day and help frame price action, especially since RBNZ rate cut probabilities are split at the current time. The implied chance of an RBNZ rate cut on Nov. 13 is 54% or in other words, around ~14bps of easing is priced in.
NZDUSD volatility suggests decent reaction
Implied volatility in NZDUSD overnight options are currently printing 9.9%. This suggests a ~60pip one standard deviation move over the day is possible off the back of NZ employment. Some interesting intra-week pivot levels to watch should we catch aggressive repricing in the RBNZ’s rate cut probabilities:
Spot – 0.6384
Upside – 0.6430 (+46 pips), 0.6465 (+81pips)
Downside – 0.6369 (-15pips), 0.6331 (-53pips)
ASX up at the open
Benchmark equity indices were steady overnight supported by positive US-China trade rhetoric and a solid beat in US ISM non-manufacturing PMI, 54.7 against 53.5 consensus. In a bid to finalise the US-China signing of “phase one” at a yet to be determined location, US tariffs imposed at the start of September are now likely to be removed. We expect the ASX 200 to point up at the open mirroring the +18pt gain in Dec Futures and carrying over momentum from the broader equity complex. Though, equally recognise a rejection of 6,702 resistance is possible given lighter volumes on the way up.
US ISM non-mfg data, while not exactly groundbreaking for the equities complex, did noticeably steer risk-on/risk-off proxy USDJPY higher +20pips at the time helping it to break above resistance at the 109 handle and 200d-MA.
