Summary:

• NZ employment report turns out to be mixed and fairly neutral for NZD
• Donald Trump is to propose a 25% tariff rate on $200 billion Chinese goods
• Apple’s shares storm higher following upbeat earnings for the fiscal third quarter

Wednesday’s morning is not bringing any larger moves across the currency market. Anyway, the NZ dollar is the worst performing major currency losing almost 0.4% as of 6:38 am BST in the aftermath of the second quarter employment release. This publication turned out to be quite neutral though, and the sole net disappointment came from wage growth. It significantly missed expectations placed at 1% in a quarterly basis (average hourly earnings) and come in at 0.2% (down from 1.1% seen during the first three months). The deceleration was also seen in annual terms, but one needs to be aware that base effects were in play. On the flip side, private wage growth grew to 0.6% qoq from 0.3% regardless of we mean wages ex- or including overtime – these prints were in line with expectations.

NZ labour market does not seem to reflect any worrisome signals as for now, and it ought to act in favour of the NZ dollar. Source: Bloomberg

Beside wage numbers the unemployment rate ticked up to 4.5% from 4.4% being, however, fully offset by the same scale rise of the labour force participation rate which moved up to 70.9%. Last but not least, employment picked up 0.5% qoq beating the consensus at 0.4% or 3.7% vs. 3.6% when it comes to the yearly basis. By and large, the report might be classified as the NZD neutral even as its morning performance does not point to this. Nevertheless, do notice that relative underperformance of riskier assets (including high beta Antipodean currencies) might also result from rumours regarding new tariffs by the White House.

The kiwi remains within the broader consolidation as well as the ascending channel at the H4 interval. The Q2 jobs release has pushed the pair somewhat lower, but the lower limit of the mentioned channel seems to be critical short-term support right now. Any breakdown of this level would lead to a pullback even toward 0.67. Source: xStation5

As we have already mentioned the US is reportedly mulling over implementing higher levies on $200 billion Chinese imported goods. After proposing a 10% rate, right now it is purportedly considering to lift this rate as high as 25% in a bid to pressure Beijing into making trade concessions. The products potentially burdened with these levies including food products, chemicals, steel and aluminium or consumer goods. Even as these tariffs will not be implemented until after a period of public comment it undoubtedly raising concerns of a further trade spat escalation weighing on risk-related assets in the morning. A while before 7:00 am BST Chinese stocks are moving down, Antipodean currencies are losing ground as well while the US dollar is the strongest major currency.

Finally, let us write a few words about Apple which presented quite buoyant earnings for its fiscal third quarter. EPS totalled $2.34 smashing the consensus at $2.18 while revenue amounted to $53.3 billion and also exceeded expectations at $52.34 billion. On the other hand, iPhone sales fell short of the median estimate at 41.79 million and came out at 41.3 million. As a result of the release company’s shares rose 4% in extended trading. Moreover, comparing with the result from the corresponding period in 2017 we may notice that EPS grew as much as 40% whereas revenue by 17%. Note that these upbeat results came after a last week’s market rout which saw both Facebook and Twitter tumbling.

It seems that it could be still too early to consider entering long on the NASDAQ (US100). The index is moving in the midst of the channel, hence until it reaches either lower or upper boundary traders might feel uncomfortably with entering the market. Source: xStation5