Market overlook: dollar strength in driving seat - ANZ

Analysts at ANZ explained that global forces (USD strength) are in the driving seat for now, but it’s hard to go past NZ’s economic picture either, especially with the RBNZ on hold.

Key Quotes:

RATES: US 10yr yields rose on expectations that expansionary fiscal policy would fast-track Fed rate hikes. The short end can’t stray too far from the OCR, so we’ll see the curve steepen as local long end yields open higher.

GLOBAL MARKETS OVERVIEW: Market price action settled down somewhat overnight although the momentum behind a higher USD, bond yields and US equities remained intact. The Mexican Peso continues to weaken. European equities were weaker with the Euro Stoxx 50 down 0.3%, the DAX 0.2%, CAC 0.3% and the FTSE 100 1.2%. The euro remains under pressure as markets swivel and eye upcoming political risks with the Italian referendum and Austrian presidential election on Dec 4. Oil prices were down again as question-marks surround OPEC’s ability to rebalance supply and demand.

DATA/EVENT PULSE

No major economic data other than US jobless claims, which fell to 254k (from 265k). Fed’s Bullard spoke and indicated that December seemed like a reasonable time to raise interest rates. Market pricing for a December rate hike is at 84% according to Bloomberg."