New Zealand dollar flies after Powell speech, NZ retail sales beat forecast

Forex

Summary:

The New Zealand dollar surged after Powell’s dovish Jackson Hole speech and stronger-than-expected retail sales, though it later steadied near 0.562. Markets now expect a Fed rate cut in September.

The New Zealand dollar has steadied on Monday. In the European session, NZD/USD is trading at 0.562, down 0.07% on the day. On Friday, the New Zealand dollar shot up 0.82%, its best one-day performance since June.

US dollar sinks after Powell's signals a rate cut

The US dollar was hammered on Friday, posting sharp losses against all the major currencies, including the New Zealand dollar. This followed Federal Reserve Chair Powell's dovish speech at a meeting of central bankers' in Jackson Hole.

Powell did not explicitly say that the Fed would cut rates next month and noted that inflation remained a risk due to tariffs. He expressed concern about the labor market, saying that "downside risks to employment are rising" and such risks could materialize quickly.

The markets focused on Powell's warning about the employment outlook and bumped up expectations that the Fed will cut rates at the September 17 meeting. As well, a second cut before the end of the year is a strong possibility.

The Fed has been in a prolonged wait-and-see stance, holding rates since December 2024. With inflation largely under control and the labor market showing wider cracks, the Fed is likely to respond with a rate cut or two before the end of the year.

New Zealand retail sales rise to 0.5%

New Zealand's retail sales for the second quarter rose by 0.5% q/q, down from 0.8% in Q1 but above the market estimate of 0.2%. Annually, retail sales jumped 2.3%, up sharply from 0.7% in Q1. The positive release indicates that consumers are spending in response to lower interest rates. The Reserve Bank of New Zealand has aggressively chopped rates and has hinted that the easing cycle will continue.

NZD/USD Technical

NZD/USD is testing support at 0.5860, followed by 0.5854 and 0.5843

0.5871 and 05877 are the next resistance lines

New Zealand dollar flies after Powell speech, NZ retail sales beat forecast_1

Source :marketpulse

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Glendon

Economic

Stocks

Intel said on Monday that the 10% stake by the U.S. government in the chipmaker could pose risks to its business, from potentially harming international sales to limiting its ability to secure future government grants.

The company laid out the new "risk factors" in a securities filing after the government decided to convert government grants into an equity stake in Intel, the latest extraordinary intervention in corporate America by President Donald Trump.

It is uncertain if this deal may result in other government entities trying to convert their existing grants into equity investments or if they might be unwilling to support future grants, the company said.

Intel shares will be bought with the $5.7 billion in unpaid grants from the Biden-era CHIPS Act and $3.2 billion awarded to Intel for the Secure Enclave program, also given under Trump's predecessor, Democratic President Joe Biden.

"To the maximum extent permissible under applicable law," Intel's obligations under the CHIPS Act will be considered discharged, barring the Secure Enclave program, according to the filing.

The transaction is expected to close on August 26.

Intel's non-U.S. business may also be impacted by the U.S. government being a significant stockholder as this could subject the company to additional regulations or restrictions such as foreign subsidy laws in other countries, the filing said.

Sales outside the U.S. accounted for 76% of its revenue for the fiscal year ended December 28, 2024, while revenue from China contributed 29% to total revenue.

Trump's deal with Intel came after CEO Lip-Bu Tan's meeting with the president, who had demanded his resignation over his ties to Chinese firms.

The company also said that the shares to be issued to the U.S. government at a discount to the current market price is dilutive to existing stockholders.

The government is purchasing Intel shares at a $4 discount to Intel's closing stock price of $24.80 on Friday.

The government's stake also reduces the voting influence of other stockholders, while its substantial additional powers over laws and regulations impacting Intel, may limit Intel's ability to pursue transactions that benefit shareholders, the filing said.

Source: Yahoo Finance

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Adam

Stocks

Economic

MARKET WRAPS

Stocks:

Indexes in Europe mostly fell to start the week--however the FTSE was higher--as investors gauged if the stock rally on fresh hopes of a September rate cut by the Federal Reserve was overblown.

"The market is pricing in more than an 85% probability that the Fed cuts interest rates by 25 basis points in September, up from around 72% ahead of Powell's speech," ING said.

Nomura Capital Management said the Treasury market's reaction to the speech felt overdone.

"There is still a fairly high degree of uncertainty," it said, and as Powell mentioned, the path for rates wasn't necessarily preset.

Risk markets were priced for a meaningful easing cycle, and that doesn't tie out with the level of uncertainty, it added, saying that it found Powell's tone generally balanced, though he clearly kept a rate cut in September on the table.

Barclays said any Fed cuts would still depend on upcoming jobs and inflation data for August.

"The door for another hold is not closed."

Still, there was a high bar for this scenario and high inflation alone wouldn't suffice, it added.

U.S. Markets:

Stock futures pointed to small losses, with the market looking to take a breath after Friday's rally.

The corporate highlight of the week is Nvidia's earnings report on Wednesday.

Its comments on demand for AI hardware will be eagerly watched after AI stocks were hit last week amid fears of a bubble.

Stocks to Watch

Comcast; Walt Disney: Trump said in a social-media post overnight that Disney-owned ABC and Comcast-owned NBC should have their licenses revoked for unfair coverage of conservatives.

Keurig Dr Pepper agreed to buy the owner of Peet's Coffee for $18 billion, a prelude to spinning off its coffee brands.

Forex:

The euro barely reacted to a better-than-expected German Ifo business-climate index .

ING said the euro could rise to $1.20 by the end of the year if the Fed opts for a series of interest-rate cuts after Powell's speech at Jackson Hole on Friday when he said that "shifting risks may warrant adjusting policy."

ING forecast the euro at $1.17 by the end of the current quarter, but expected prospects of further rate cuts will lift it further.

The dollar edged higher against a basket of currencies, recovering modestly after sharp falls on Friday as investors adjusted U.S. rate-cut expectations.

Bonds:

Bunds barely reacted to the German Ifo business-climate index.

The five- to 30-year segment of the Treasury curve has room to steepen, Citi said.

"We prefer five- to 30-year steepeners due to the less punitive carry compared to two- to 10-year."

This is combined with Citi's view that two-year yields may have limited room to rally in the short term unless nonfarm payrolls data are weak, it added.

Separately it said it continued to expect the year-end level of the 10-year Treasury yield at 4.10%, sticking to its forecast it has held since last year.

However, Citi modestly updated its other benchmark points to better fit its view for a steeper curve and lower policy rate expectation to be priced for 2026.

Citi's base case for the two-year Treasury yield is 3.50%; 3.65% for the five-year yield and 4.70% for the 30-year yield.

The two-year Treasury note had recorded one of its best year-to-date performances outside of a recession since 2000, and without a single rate cut from the Fed, Payden & Rygel said.

Energy:

Oil prices were little changed as investors weighed expectations of U.S. rate cuts in September and potential disruptions to Russian crude flows.

Fading optimism over a Russia-Ukraine summit and Trump's tariff threats against India continued to provide underlying support to prices.

"It's looking increasingly likely that secondary tariffs against India for their purchases of Russian oil will go ahead on Aug. 27."

Gas

European natural-gas prices slipped.

Inventories across the EU were nearly 76% full, according to Gas Infrastructure Europe, below the 91% level seen last year and lower than the 83% five-year average.

Prices were supported by fading optimism over a meeting between the Ukrainian and Russian presidents, alongside concerns over upcoming maintenance at Norwegian plants.

In Asia, buyers stepped up LNG imports last week to replenish inventories after the summer.

Imports into China, Japan, and South Korea increased on a 30-day average, with Beijing's daily intake at its highest since January, according to ANZ.

Metals:

Gold futures ticked lower, though they held to higher ground after Powell's dovish tone on the prospect of monetary policy easing.

Powell's speech at the Jackson Hole symposium before the weekend reassured markets that the Fed is tilted toward cutting interest rates rather than renewed tightening, supporting the appeal of non-interest-bearing bullion, Pepperstone said.

Near-term, the release of Personal Consumption Expenditure data could weigh on the dollar and boost the precious metal further, and even more crucially, further signs of softness in next week's Nonfarm Payroll report would strengthen the case for cuts and amplify gold demand, it added.

EMEA HEADLINES

Orsted Shares Tumble After Stop-Work Order on Revolution Wind Project

Orsted shares tumbled after the Danish renewable-energy company said it received a stop-work order from the U.S. government on a key offshore wind project off the coast of Rhode Island.

In opening trade, shares fell 16% to 180.35 Danish krone ($28), taking their year-to-date performance down more than 45%.

UniCredit Raises Physical Stake in Commerzbank to 26%

UniCredit said it converted part of its position in peer Commerzbank into stock, raising its equity stake in the German bank it hopes to engineer a merger with to 26%.

The Italian lender said Monday that it converted financial instruments it holds in the bank into physical shares, consolidating the equity stake into its accounts.

GLOBAL NEWS

Tech Rally Shows Signs of Losing Steam

The prospect of lower interest rates is boosting many parts of the market: real-estate firms, banks, manufacturers. The outlook for Wall Street's most popular stocks-the Magnificent Seven tech giants that have led major indexes to records-is much less clear.

Those market leaders-Amazon.com, Alphabet, Apple, Meta Platforms, Microsoft, Nvidia and Tesla-have been buffeted recently by questions about the potential for artificial intelligence, concerns about their increasingly stretched valuations and competition from hitherto unloved parts of the market.

How a Historic Immigration Drop Is Changing the Job Market

Last week, Federal Reserve Chair Jerome Powell said the U.S. labor market has entered "a curious kind of balance." The demand for workers has cooled, yet the unemployment rate has held steady because the supply of labor has slowed abruptly.

Behind that slowing in the labor supply is a dramatic swing in immigration, from one of the biggest waves in U.S. history to almost none. Economists say that could have subtle but lasting consequences.

Israeli Backlash Builds Against Macron's Push for Palestinian State

PARIS-French President Emmanuel Macron's decision to recognize a Palestinian state has sparked a backlash from the Israeli government, galvanizing hard-liners and drawing an accusation from Prime Minister Benjamin Netanyahu that he is stirring up antisemitism.

Macron's decision shook up the status quo among Western powers, which for decades dangled recognition as a means to bring Israel and the Palestinians to the negotiating table for a two-state solution. Australia and Canada have said they are ready to follow in France's footsteps, while the U.K. has said it would do so if Israel doesn't agree to a cease-fire in Gaza.

Hunting Russian Drones in a Prop Plane With Shotguns

This month, a beaten-up, Soviet-era propeller-driven plane taxied to a halt on a rural runway and two of Ukraine's top air aces clambered out, one carrying a rifle. The pair, clad in olive-drab flight suits, are part of a low-tech solution to the high-tech problem of Russian drones.

The 56-year-old pilot, who learned to fly as a hobby before the war, and the gunner, 38, a former auto mechanic who had never been in a plane before the invasion, are part of a squadron dedicated to knocking down the unmanned Russian attack and reconnaissance aircraft that are the bane of ground troops and civilians.

Source: morningstar

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Samantha Luan

Cryptocurrency

Economic

Forex

Political

Japan is making headlines, not just for its rich culture, but for its forward-thinking approach to digital innovation. Prime Minister Shigeru Ishiba recently underscored the government’s strong commitment to Web3, signaling a pivotal shift towards integrating advanced digital technologies into the nation’s economic framework. This proactive stance positions Japan Web3 as a cornerstone for future prosperity.

Why is Japan Embracing Web3?

At the recent WebX2025 event, Prime Minister Ishiba highlighted Web3’s immense potential. He revealed that the upcoming Osaka Expo is already incorporating Web3 technologies, showcasing practical applications. Moreover, local pilot projects are successfully using digital tokens to reward community participation, fostering stronger local governance and engagement.This demonstrates a clear governmental belief that Web3 is not just a technological trend, but a practical tool. It can empower communities and drive efficiency. The Prime Minister’s remarks confirm Japan’s strategic focus on leveraging these innovations for tangible benefits.

Driving Innovation: Japan’s Web3 Startup Strategy

Japan aims to reinforce its ambitious five-year startup growth plan. This strategy involves significant investment and crucial regulatory reforms. Notably, Web3 and related digital industries are central to this plan.The government recognizes that a supportive ecosystem is essential for innovation to thrive. Therefore, these reforms will streamline processes and encourage new ventures. This commitment ensures that Japan Web3 startups receive the necessary backing to develop groundbreaking solutions.

Beyond Economics: How Japan Web3 Addresses Societal Challenges

Prime Minister Ishiba eloquently described Web3 as a vital source of innovation. He believes it can help Japan tackle significant national challenges, such as its declining population. Web3 offers new avenues for:

● Economic Revitalization: Creating new industries and job opportunities.

● Community Engagement: Empowering citizens through decentralized governance models.

● Global Collaboration: Opening new pathways for international cooperation and partnerships.

● Social Transformation: Driving broader societal changes that improve quality of life.

Consequently, the integration of Japan Web3 technologies is expected to usher in a new era of growth and resilience for the nation. This holistic approach emphasizes the technology’s potential to create a more dynamic and inclusive society.

The Path Ahead for Japan Web3

Japan’s enthusiastic embrace of Web3 marks a significant moment in the global digital landscape. The government’s clear vision, coupled with concrete plans for investment and regulatory reform, positions Japan as a leader in this evolving space. By fostering innovation and addressing societal needs, Japan Web3 initiatives promise a future of enhanced economic growth and social progress. This commitment reflects a deep understanding of how technology can reshape national destiny.

Frequently Asked Questions (FAQs)

What is Web3 and why is Japan interested in it?

Web3 refers to the next generation of the internet, built on decentralized technologies like blockchain. Japan is interested because its Prime Minister sees it as a key driver for economic growth, innovation, and a solution to national challenges like population decline.

How is Japan currently using Web3 technologies?

Currently, the Osaka Expo is applying Web3 technologies, and local pilot projects are using local tokens to reward community participation in governance. These are practical examples of Web3 in action within Japan.

What is Japan’s plan for supporting Web3 startups?

Japan plans to reinforce its five-year startup growth plan through increased investment and regulatory reforms. Web3 and related digital industries are expected to play a central role in this strategy, providing a supportive environment for new ventures.

How can Web3 help Japan address its population decline?

Web3 can help by fostering innovation, creating new economic opportunities, and enabling more efficient and inclusive community models. This can attract talent, stimulate economic activity, and provide new ways for citizens to engage and contribute.

What are the broader impacts of Japan’s Web3 strategy?

Beyond economic growth, Japan’s Web3 strategy aims to open new paths for international cooperation and drive broader social transformation. It seeks to leverage decentralized technologies for a more resilient, innovative, and connected society.

Source: CryptoSlate

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Michelle

Economic

Stocks

Furniture stocks tumbled in premarket trading after President Trump announced Friday evening on Truth Social that his administration has launched a "major" tariff investigation into the U.S. furniture industry. This underscores what many consumers already know - that much of today's furniture, whether chairs and couches or tables, sold in brick-and-mortar stores or on e-commerce platforms, is sourced from overseas factories, primarily in Southeast Asia.

"I am pleased to announce that we are doing a major Tariff Investigation on Furniture coming into the United States," Trump wrote on Truth Social.

Trump continued, "Within the next 50 days, that Investigation will be completed, and Furniture coming from other Countries into the United States will be Tariffed at a Rate yet to be determined."

The president explained this move "will bring the Furniture Business back to North Carolina, South Carolina, Michigan, and States all across the Union."

According to government statistics, furniture and wood products manufacturing employed 1.2 million people in 1970. By the peak of the Dot-Com bubble, that number had fallen to 681,000, and today it sits at around 340,000.

With furniture factories offshored to Southeast Asia, resulting in the loss of hundreds of thousands of jobs across the Heartland, trade publication Furniture Today recently noted that the U.S. imported about $25.5 billion worth of furniture in 2024, up 7% from 2023, with the majority of imports coming from Vietnam and China.

In premarket trading, furniture stocks moved lower: RH (Restoration Hardware) -8%, Wayfair -6%, Arhaus -4%, and Williams-Sonoma -4%. Inversely, furniture stocks with manufacturing operations inside the U.S., such as La-Z-Boy and Ethan Allen, rallied.

Great news for La-Z-Boy...

Source: Zero Hedge

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Warren Takunda

Economic

Britain faces an “acute challenge” from its weak underlying economic growth and a drop in the number of workers since the pandemic, according to the Bank of England governor, Andrew Bailey.

A rise in the number of people defined as long-term sick and a big drop in young people in work – factors that he suggested might be intertwined – added to the squeeze created by an ageing population.

This increased the need for efforts to boost economic productivity, Bailey told the gathering of leading policymakers in Jackson Hole, Wyoming, at the weekend.

The emphasis needed to be on raising productivity growth, Bailey said. “Ageing is not going to turn around in the foreseeable future.” By 2040, 40 per cent of the UK population will be older than 64, he added.

He said the Bank of England had turned its focus away from long-term trends in unemployment to look instead at levels of labour force participation.

Official data shows that the percentage of 16- 64-year-olds active in Britain’s labour market is lower than before the Covid-19 pandemic, unlike in other advanced economies. Mental health was the most common reason for being inactive, a point he described as “a very concerning development”.

Bailey added that there were caveats around the data, including a low response rate and the possibility that the economically inactive might be more likely to take part in official surveys.

But he did not think this factor explained all the decline. “Data caveats aside, this is a pretty sad story for the UK because … we are well at the bottom of the league table,” he said.

The government has pledged to boost labour force participation and economic growth, but earlier this year MPs rejected reforms to disability benefits, which some analysts say discourage people from work.

Data for the second quarter of 2025 showed that 21% of Britons aged 16-64 are neither in work nor actively seeking a job, down from a peak of 22.2% last year but above a low of 20.3% before the pandemic.

Reduced labour force participation is one reason why some Bank of England policymakers fear that Britain’s inflation rate – the highest in the G7 at 3.8% in July – may be slow to return to its 2% target.

The latest official data showed the UK economy grew at a faster rate than expected in the second quarter, despite a slowdown from a strong start to the year amid pressure from tax increases and Donald Trump’s global trade war.

The Office for National Statistics figures showed that growth in gross domestic product slowed to 0.3% in the three months to the end of June, down from a rate of 0.7% in the first quarter.

Although it beat forecasts by City economists for a slowdown to 0.1%, the weak reading underscores the challenge for the chancellor, Rachel Reeves, as she considers options for boosting the economy and raising revenues at her autumn budget.

Source: Theguardian

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Warren Takunda

Economic

World shares were mixed on Monday after the head of the Federal Reserve hinted that cuts to interest rates may be on the way.

European markets opened lower, with Germany’s DAX down 0.2% at 24,305.67, while the CAC 40 in Paris lost 0.6% to 7,918.34. Britain’s markets were closed for a holiday.

The futures for the S&P 500 and the Dow Jones Industrial Average were down 0.2%.

On Friday, stocks on Wall Street rallied after Fed chair Jerome Powell said in a speech to an annual conference in Jackson Hole, Wyoming, that he’s seen risks for the job market. That followed a surprisingly weak report on job growth this month that has led many traders to expect a rate cut as soon as the Fed’s next meeting in September, after months of pressure from President Donald Trump for lower rates.

Lower interest rates make borrowing easier, helping to spur more investment and spending, but also potentially fueling inflation.

In Asian trading, shares advanced.

Hong Kong’s Hang Seng index closed 1.9% higher at 25,829.91, while the Shanghai Composite index surged 1.5% to 3,883.56. It has been trading at its highest level in a decade, despite worries over higher tariffs on exports to the United States under Trump and weak domestic demand at home.

Taiwan’s Taiex gained 2.2% as semiconductor maker TSMC Corp.'s shares advanced 3.1%.

Tokyo’s Nikkei 225 gained 0.4% to 42,807.82, with computer chip-related companies leading gains.

The Kospi in South Korea climbed 1.3% to 3,209.86.

Australia’s S&P/ASX 200 edged less than 0.1% higher, to 8,972.40.

The SET in Bangkok gained 0.7%, while the Sensex in India rose 0.5%.

This week, Nvidia’s earnings report, due Wednesday after markets on Wall Street close, is a key focus of attention.

Nvidia’s role as a key supplier of chips for artificial intelligence and its heavy weighting give it outsized influence as a bellwether for the broader market.

On Friday, the S&P 500 leaped 1.5% for its first gain in six days, while the Dow industrials soared 1.9%. The Nasdaq composite also jumped 1.9%.

Investors love lower interest rates, and stocks of smaller companies led gains. They can benefit more from lower interest rates because of their need to borrow money to grow. The smaller stocks in the Russell 2000 index surged 3.9% for its best day since April.

Still, Powell did not commit to any kind of timing. He said the job market looks OK, even if “it is a curious kind of balance” where fewer new workers are chasing after fewer new jobs. Inflation, meanwhile, still has the potential to push higher.

The yield on the 10-year Treasury fell to 4.25% from 4.33% late Thursday. The two-year Treasury yield, which more closely tracks expectations for Fed action, sank to 3.69% from 3.79% in a notable move for the bond market.

Intel climbed 5.5% after Trump said the chip company has agreed to give the U.S. government a 10% stake in its business.

Nvidia rose 1.7% to trim its loss for the week. The company, whose chips are powering much of the world’s move in to artificial-intelligence technology, had seen its stock struggle recently amid criticism that it and other AI superstars shot too high, too fast and became too expensive.

In other dealings early Monday, U.S. benchmark crude oil gained 50 cents to $64.16 per barrel. Brent crude, the international standard, added 45 cents to $67.67 per barrel.

The U.S. dollar rose to 147.34 Japanese yen from 146.88 yen. The euro fell to $1.1696 from $1.1727.