NZD/CHF - Dollar Firmed As Markets Raised Cash - 08/18/2022 (GMT)

STATE OF THE MARKETS

Dollar firmed as markets raised cash. US stocks finished lower on Wednesday after Fed’s minutes showed several committee members felt that rates were still below neutral and more hikes are needed before any pause would be considered. Investors pulled back on stocks and bonds while bidding more dollars, sending yields higher across the board, while Dow (-0.50%), S&P (-0.72%), Nasdaq (-1.25%) and Russell (-1.64%) erased earlier gains. The 10Y benchmark jumped to 2.92% as the Dollar firm above the 106.65 mark.

In the commodity markets, Dollar strength pushed major commodities lower with crude seen under pressure but was little changed to settle around $86.80/bl as New York closed. Gold tumbled further to close below $1761.60/oz and erased two weeks’ gain. Iron ore, however, remained resilient and was little changed around the $107.30/tn as New York closed. In the FX space, short and medium term accounts seemed bearish as Aussie and Kiwi were sold alongside Yen and Sterling. Long term investors seemed cautious as Aussie and Kiwi were in demand alongside Swiss and Sterling while Yen, Loonie and Dollar were offered. Yen was seen synching across all horizons signaling a turn around is around the corner.

On Thursday, markets expect to scoop bargains in equities as more earnings reports come in from Estee Lauder (EL), Applied Materials (AMAT), NetEase (NTES), Ross Stores (ROST), Bill.Com Holdings (BILL), Kohls (KSS), BJ Wholesale (BJ), Tapestry (TPR) and OSI Systems (OSIS) as well as the latest US jobless claims and leading indicators.

OUR PICK – NZD/CHF

Risk sentiments returned to long term bearish. Sentiments model showed upside remained capped in the long term while short and medium term have returned to bearish. Upside risk remains however shall risk sentiments improved amid less hawkish Feds and more hawkish RBNZ. SNB may raise rates further as recent inflation seems stagnant.

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