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This data point tends not to shift NZD/USD around much at all upon release.

More data yet to come from NZ:

This article was written by Eamonn Sheridan at www.forexlive.com.

Good morning, afternoon and evening all. Any charts, technical analysis, trade ideas, thoughts, views, ForexLive traders would like to share and discuss with fellow ForexLive traders, please do so:

This article was written by Eamonn Sheridan at www.forexlive.com.

• US August retail sales control group +0.3% versus +0.3% expected
• Canada August CPI 2.0% vs 2.1% expected
• US September NAHB home builder sentiment 41 vs 40 expected
• US July business inventories 0.4% versus 0.3% expected
• US August industrial production +0.8% vs +0.2% expected
• US treasury auctions off $13 billion of 20 year bonds at a high yield of 4.039%
• Canada August housing starts 217.4K vs 252.5K expected
• ECB’s Villeroy: French goal to cut deficit to 3% of GDP by 2027 is not realistic
• WSJ: JPMorgan in talks with Apple for credit card business
• Goldman Sachs raises its estimate for Q3 growth to 2.8%
• Atlanta Fed Q3 GDPNow 3.0% vs 2.5% prior
• Lebanese says about 2,800 injured, including 200 in critical condition, in pager bombings
• Israel preparing for a war with Hezbollah
• New Zealand GDT price index +0.8%
• Timiraos: Fed faces a finely-balanced choice over whether to cut
• FOMC preview: Why the dot plot isn’t helping anyone

Markets:

• Gold down $14 to $2568
• US 10-year yields up 2.6 bps to 3.65%
• WTI crude up $1.26 to $71.37
• S&P 500 up 0.1% in 7th straight day of gains
• AUD and USD lead, JPY lags

The US dollar was modestly bid on most fronts on Tuesday as we near the FOMC decision. The catalyst was a slightly stronger retail sales report that further clouds the 50 vs 25 basis point debate. Pricing is at 65% for 50 bps, which was stable today but yields rose and so did the dollar.

The euro fell to 1.1120 from 1.1140 while the pound fell to 1.3160 from 1.3200. The antipodeans also lost ground but some of that was compounded by a retracement in stock markets. S&P 500 futures had been higher but the index ultimately fell flat and briefly traded with decent losses.

The big move on the day was in USD/JPY, which continues to be the main event in 2024. That pair jumped to 142.27 from 140.50 in the second day of strong US bids. It looks to be closing on the highs and tracing out a three-candle reversal as traders settle dollar shorts ahead of the Fed decision.

USD/CAD briefly jumped on lower Canadian CPI and the prospect of a 50 bps cut in October. That is now closer to a 50/50 proposition but after a brief surge the pair retraced to nearly unchanged on the day. Macklem put most of the onus on growth numbers to support faster easing and good US numbers could be raising the idea that Canada will muddle along.

This article was written by Adam Button at www.forexlive.com.

The major indices are closing with mixed but modest changes.

The S&P did trade to a new record intraday high level, above 5669,. but stalled just above that level at 5670.81. The buyers turned to sellers. After trading negative into the last hour of trading, buying at the close pushed the index higher. The index closed in positive territory for the 7th consecutive day but it was only by 0.03%.

The Dow- also traded to a new intraday all time high – but closed lower on the day.

The Nasdaq was up 189 points at session highs but is closing up by 35.93 points.

The final numbers are showing:

• Dow industrial average fell as 15.90 points or -0.04% at 41606.18
• S&P index rose 1.49 points or 0.03% at 5634.58
• NASDAQ index rose 38.93 points or 0.20% at 17628.06

The small-cap Russell 2000 did the best. It rose 16.30 points or 0.74% at 2205.47.

This article was written by Greg Michalowski at www.forexlive.com.

There is plenty top come on the data agenda but none of it is higher-tier. Note that mainland Chinese markets reopen today after holidays on Monday and Tuesday. Hong Kong is closed today.

This snapshot from the ForexLive economic data calendar, access it here.

The times in the left-most column are GMT.

The numbers in the right-most column are the ‘prior’ (previous month/quarter as the case may be) result. The number in the column next to that, where there is a number, is the consensus median expected.

I’ve noted data for New Zealand and Australia with text as the similarity of the little flags can sometimes be confusing.

This article was written by Eamonn Sheridan at www.forexlive.com.

USD/JPY has extended to the highs of the day, up 154 pips to 142.15. It’s been a strong reversal after the pair touched a 2024 low of 139.59 yesterday.

I’m kicking myself a bit because the doji reversal yesterday was a sign of a turn and with the Fed coming up, there was some incentive to take some off the table. But that’s in the past now.

So the question is whether the market is balanced going into the Fed and I think it’s much closer, though we could see Tokyo follow on with this price action before it flattens out tomorrow.

Fed pricing is aggressive so there is some risk of disappointment, which should lead to a knee-jerk higher in the US dollar. That should be somewhat balanced by selling in equities, which should hurt USD/JPY. On net though, the pair should rally on a hawkish Fed but after the statement, eyes will quickly turn to Powell’s press conference and whether he tees up the possibility of 50 bps in November and/or a strong willingness to be proactive against the threat of rising unemployment.

This article was written by Adam Button at www.forexlive.com.

The US has been slowly refilling the strategic petroleum reserve but will look to accelerate that with a purchase of 6 million barrels, according to a Reuters report.

The administration will announce the solicitation as soon as tomorrow, according to the report and it will be for delivery in early 2025.

In 2022, the US sold 180 million barrels over six months and achieved around $96 per barrel. It’s aiming to refill below $80 in what would be an impressive trade. So far it’s bought back about 50 million barrels.

WTI is trading at $71.33 today, up $1.24.

This article was written by Adam Button at www.forexlive.com.

It’s wild that in 2027 — seven years after the pandemic emergency — governments will still be breaking eurozone deficit rules. This obviously doesn’t end well.

In the long analysis, I think it will show that the optimum path for politicians trying to win the next election is to spend more, in part because the stability of the euro delays the consequences. But at some point this becomes a collective action problem as no one wants to enforce the 3% deficit rule.

Moreover, it all falls apart when the eurozone ‘consensus’ in the Merkel/Sarkozy mould is challenged by a populist wave. They see this as existential and allow the standards on deficits to slip even further in order to protect the status quo.

Eventually, the market does what it always does to European countries that spend too much and the currency is wrecked.

Anyway, more from Villeroy:

• Most of the effort on deficits should come from spending reductions but targeted tax hikes needed too
• It would be better to take 5 years to get to 3%, which would remain in line with EU rules
• Sees 2025 GDP growth of 1.2%, unchanged from prior
• Sees 2026 GDP growth of 1.5% vs 1.6% prior
• Still sees 2024 HICP inflation at 2.5%
• Sees 2025 HICP inflation at 1.5% vs 1.7%

That last number is a real kicker and it puzzles me why the ECB isn’t signalling quicker rate cuts.

This article was written by Adam Button at www.forexlive.com.

Israeli military officials via various Hebrew news channels stating full-blown war between Israel and Hezbollah appears imminent.

That shouldn’t surprise anyone as the pager explosions were basically a declaration of war by Israel on Lebanon/Hezbollah. The thing is, I wonder if Hezbollah is so crippled that it’s not ready to fight and/or if Israel is going to bring the fight to them, regardless.

In any case, the gold market doesn’t seem to be too fussed. However oil is up $1.41 to $71.50.

This article was written by Adam Button at www.forexlive.com.

Goldman Sachs anticipates the FOMC will implement a 25 basis point rate cut at its September meeting, viewing recent comments from Fed officials as indicative of a preference for this move over a larger cut. The focus will shift towards labor market risks, and the firm expects to see a median dot plot implying three rate cuts in 2024.

Key Points:

1. Rate Cut Expectation:

   • Goldman Sachs forecasts a 25bp rate cut at the September meeting.
   • A 50bp cut is seen as a reasonable precaution but is less likely given recent Fed communications.

2. Labor Market Focus:

   • The meeting will highlight risks related to the labor market.
   • Concerns exist regarding whether labor demand can absorb new entrants and prevent the unemployment rate from rising.

3. Future Rate Projections:

   • Expectation of three 25bp cuts in 2024, with a terminal rate projected between 3.25% and 3.5%.
   • The median dot plot will likely indicate a gradual path towards 4.625% in 2024 and 2.875% by 2027.

4. Economic Projections:

   • Anticipated changes include higher GDP growth for 2024, a higher unemployment rate path, and a lower inflation trajectory.

5. Risks to Forecast:

   • Risks to the baseline forecast are tilted to the downside but less severe than what current market pricing suggests.

Conclusion:

Goldman Sachs expects the FOMC to proceed with a 25bp cut while emphasizing labor market risks. The meeting is likely to provide updated economic projections and a dot plot that reflects a cautious but structured approach to future rate cuts, aligning with a focus on maintaining economic stability amid evolving labor market dynamics.

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This article was written by Adam Button at www.forexlive.com.

High Yield: 4.039%

• Last month: 4.16%

• Six-auction average: 4.512%

WI level at the time of the auction: 4.019%

Tail: +2.0 basis points

• Last month: -0.1bps

• Six-auction average: -1.3bps

Bid-to-Cover: 2.51X

• Last month: 2.54x

• Six-auction average: 2.68x

Dealer Participation: 18.6%

• Last month: 9.7%

• Six-auction average: 8.7%

Direct Bidders: 16.3%

• Last month: 19.3%

• Six-auction average: 17.1%

Indirect Bidders: 65.09%

• Last month: 71.0%

• Six-auction average: 74.2%

AUCTION GRADE: D-

All the components were less than the 6 month averages. I only give it a D- because I heard that failing grades are not given out anymore. So am feeling generous, but it was not supported by buyers.

The good news is the 20 year is not a maturity that is in demand. Hence, the amounts auctioned are much lower than the $38 or so billion for 10 and 30 year issues.

The reaction across the yield curve is somewhat modest as well.

This article was written by Greg Michalowski at www.forexlive.com.

The WSJ is reporting that JPM is in talks with Apple to take over credit card business from Golman.

• The program has over 12 million users and roughly $17 billion in outstanding balances.

• Apple has been seeking a new issuer after deciding to part ways with Goldman Sachs, the current issuer, last year.

• JPMorgan is seeking concessions from Apple, including paying less than the full face value of the outstanding balances and changing the billing structure of the card program.

• Apple has signaled that it is open to making changes to the billing structure, which could help to alleviate customer-service issues and regulatory scrutiny.

• A deal between JPMorgan and Apple would further tie together America’s biggest bank and one of the largest technology companies in the world, potentially expanding Apple’s financial services offerings.

• Apple’s credit-card program has been successful, with over 12 million users and a strong brand reputation, making it an attractive asset for JPMorgan to acquire.

• The deal could also help Apple to expand its reach in the financial services sector, potentially leading to new partnerships and offerings.

Overall, Apple’s potential deal with JPMorgan Chase could be a win for the company, as it would allow Apple to maintain its credit-card program and potentially expand its financial services offerings, while also providing a new partner to help manage the program’s risks and regulatory challenges.

Apple shares are trading down $-0.31 or -0.15% at $216.01. The low price today reached $214.50. The high price extended to $216.90. The recent decline has been off of the expectations for sluggish demand for the new iPhone due to AI software not being ready for the new phone. Nevertheless, dictations still remain strong that once things kick in, it will give consumers a reason to upgrade.

Looking at the hourly chart, the price gapped lower after the sluggish demand reports over the weekend. That made the high price from Friday look foreshadowing. The price high stalled right at the 100 hour moving average (blue line on the chart below).. That is the bearish news. The not so bearish is the low price yesterday and today stalled right at the 50% midpoint of the move up from the August low. So the buyers are staying play above that level. However, the price will need to get back above the 50-hour MA, the 200 hour MA and the 100-hour MA between $220.14 up to $222.96 to give the buyers more control in the short term.

This article was written by Greg Michalowski at www.forexlive.com.