ACY Securities

Over the weekend, there was a positive development for the United States as Congress reached an agreement to temporarily fund the government for an additional 45 days, averting a looming shutdown.

In September, the New Zealand Dollar (NZD) has demonstrated remarkable strength among the G10 currencies, registering a gain of 1.1% against the US Dollar (USD). This performance aligns with other commodity currencies.

Looking beyond the dollar overshoot. Increased oil prices and rising real yields likely had a stronger impact on the dollar due to positive month-end flows. This could result in the dollar overshooting from what I consider to be fair levels.

US Treasury Yields eased from multi-year highs after the latest batch of economic data revealed some pockets of weakness in the economy. Pending Home Sales in America plunged 7.1% in August from a 0.5% rise in July.

The US dollar maintains its steady ascent, supported by various factors such as the adjustment of the long-term Federal Reserve funds rate, elevated oil prices, and uncertainties surrounding the trajectories of the European and Chinese economies.

The relentless ascent in US bond yields persists, yet there are emerging indications that this surge is beginning to exert a more pronounced influence on market risk sentiment. This development wasn't entirely unexpected; the only uncertainty lay in the timing.

Headline inflation accelerates to 5.2%; Still expect another RBA hike alongside elevated services inflation. In summary, Australia saw a 0.58% month-on-month increase in its Consumer Price Index (CPI) for August. The year-on-year inflation rate also accelerated, reaching 5.2% from the previous 4.9%.

The US dollar has maintained its upward momentum as the week commenced, resulting in the dollar index reaching a fresh peak of 106.30 yesterday. This surge has been fuelled by the continual rise in US yields, particularly at the long end of the yield curve.

US Treasury Bond yields soared with the benchmark 10-year rate up to 4.54% from 4.43%, a 16-year high. The two-year US yield rose to 5.12% (5.11%). Minneapolis Fed President Kashkari said one more rate increase was needed after US Consumer prices rose in August.

The Eurozone's PMI figures, released last Friday, slightly exceeded expectations, but they still indicated a significant contraction in economic activity. This has raised concerns about the possibility of negative GDP growth in the second half of the year.

Even if we still expect the dollar to turn lower by early 2024, USD upside risks remain material in the near term after the Fed surprised with more hawkish dot plots than market pricing.

The futures CFDs introduced by ACY Securities will primarily be quarterly contracts across various assets however, the energy futures CFDs will be available as a monthly contract, catering to traders who prefer shorter-term trading opportunities.