NZD

• Market wobbles. Higher yields dampened risk appetite. USD stronger. News that Fitch downgraded the US may add to market nerves.• Weaker AUD. Shaky risk sentiment & a paring back of RBA rate hike pricing following yesterday’s on hold decision have weighed on the AUD.• US focus. In addition to any spillovers from the US ratings news, attention will remain on the US over coming days with non-farm payrolls due Friday. The new month has started with a bit of renewed turbulence. Bond yields across Europe and the US rose, led by long-end rates. The US 10yr yield increased ~6bps...

• European growth. EUR lower after Eurozone PMIs underwhelm. The shift in relative yield differentials supported the USD.• China Politburo. The leadership acknowledged the “difficulties”, & while it signaled it may inject fresh stimulus, no concrete measures were unveiled.• AUD events. Australia Q2 CPI due tomorrow, with the US Fed rate announcement & Chair Powell’s press conference on Thursday morning. Mixed performance across markets overnight, with divergence in the US and European business PMI data in focus. The impact of the rapid-fire policy tightening is bubbling to the surface. In Europe, falls in the PMI suggest growth momentum has slowed...

• Stronger USD. US jobless claims declined, another sign the labour market is still tight. US bond yields rose, supporting the USD.• AUD round trip. The AUD’s Australian labour force & stronger CNH induced gains unwound overnight. AUD a bit firmer on the crosses.• Next week. Q2 AU CPI (26 July) could make or break the case for an August RBA hike. US Fed, ECB, & BoJ policy decisions also on the schedule. A more cautious tone across markets, with a round of disappointing tech-sector earnings results and ongoing signs of tight labour market conditions rattling nerves as it points...