Commodity currencies under pressure

<p>Kia ora,</p><p>Welcome to Thursday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the international edition from Interest.co.nz.</p><p>And today we lead with news that mixed US data that doesn't show their labour market retreating, along with weak Chinese data, has the greenback rising but bond yields falling. Commodities are out of favour.</p><p>US <a href="https://www.mba.org/news-and-research/newsroom/news/2023/05/31/mortgage-applications-decrease-in-latest-mba-weekly-survey" target="_blank"><strong>mortgage applications</strong></a> fell last week to a three month low (and approaching only half the level of a year ago), held back by both a lack of inventory for sale in their residential market as sellers are reluctant to chase prices lower, and higher interest rates. The benchmark 30 year fixed rate is now 6.91% plus points, a +22 bps rise in a week (thanks to the debt-limit debate).</p><p>Meanwhile their labour market just keep surprising with its strength. We get the May non-farm payroll data on Saturday NZT. Today the <a href="https://www.bls.gov/news.release/jolts.nr0.htm" target="_blank"><strong>April job openings data</strong></a> surprised with an unexpected rise when a modest fall was anticipated. That pressure will keep the Fed on edge.</p><p>And this is despite last week's <a href="https://www.redbookresearch.com/" target="_blank"><strong>retail data</strong></a> coming in only +1.2% higher than a year ago on a same-store basis, far less than inflation.</p><p>And despite the <a href="https://www.dallasfed.org/research/surveys/tssos/2023/2305" target="_blank"><strong>Dallas Fed's services sector</strong></a> weakening. And despite the <a href="https://chicago.ismworld.org/news-publications/reports/research-survey/" target="_blank"><strong>Chicago PMI</strong></a> coming in sharply lower too.</p><p>However the Fed's latest <a href="https://www.federalreserve.gov/monetarypolicy/beigebook20230531.htm" target="_blank