Directfx admin

The New Zealand Dollar (NZD) improved on early week levels to 0.5025 (1.9900) Friday against the British Pound (GBP) as equity markets posted gains improving “risk”. The NZ budget never really rocked the boat over the sessions with plenty of range trading. UK inflation has been downgraded as energy effects have dragged the number lower with utilities said to be a massive pull-on inflation through the second half of the year. The kiwi looks to retest resistance at 0.5050 (1.9800) possibly before the close. On the calendar we look ahead to next week’s RBNZ cash rate announcement.

The current interbank midrate is: NZDGBP 0.5027 GBPNZD 1.9892
The interbank range this week has been: NZDGBP 0.4963- 0.5030 GBPNZD 1.9877- 2.0147

The New Zealand Dollar (NZD) wasn’t able to hold 0.6260 levels midweek dropping back to 0.6200 against the US Dollar (USD) early Friday as the equity rally ran into selling pressures. Fed officials have indicated the next policy meeting rate decision will most likely be a close call with most members hinting they support further hikes. Lifting the rate another quarter percent seems to be the call come June 14th. NZ Producer prices come in light just prior to the NZ annual budget being read, the cross bouncing around over the announcement. Next week’s RBNZ policy meeting Wednesday could be interesting with the budget pushing up chances of further hikes by the central bank with the budget not doing much to ease inflationary pressures.

The current interbank midrate is: NZDUSD 0.6240
The interbank range this week has been: NZDUSD 0.6185- 0.6271

Late last week’s hawkish tone from the ECB seems to be losing its impact this week with the cross coming off the open at 0.6125 (1.6330) to 0.6165 (1.6220) in early trading Tuesday. The EU economy seems to be weathering the Ukraine war well with a diversification of gas supply and recent falls in prices. The economy continues to grow with GDP forecasts this year of a 1.1% gain in growth compared with 0.9% forecast back in February. Fears of a recession in the area are abating. Coming up we see Aussie employment data Thursday.

Current Level: 0.6165 (1.6220)
Resistance: 0.6200 (1.6800)
Support: 0.5950 (1.6120)
Last Weeks Range: 0.6117-0.6198 (1.6134-1.6346)

The English Pound (GBP) has stabilised around the 0.5350 (1.8700) area Monday against the Australian Dollar (AUD) after last week’s BoE cash rate hike shifted the pair lower to 0.5330 (1.8770) The Bank of England is not expected to raise rates at their June meeting unless the labour market data and inflation data comes in stronger than expected. Price has moved above the 100-day moving average this morning suggesting further upside the Aussie. Looking ahead we have Australian employment data to publish on Thursday the highlight.

Current Level: 0.5354 (1.8677)
Resistance: 0.5435 (1.9000)
Support: 0.5263 (1.8400)
Last Weeks Range: 0.5327-0.5380 (1.8585-1.8772)

Risk gone Monday improved with most high-risk products making a comeback. The Australian Dollar (AUD) recovered to 0.6700 levels from 0.6635’s open against the US Dollar (USD). Aussie was hit particularly hard ending the week at lows from a 200-point upswing earlier in the week. Fallout from the US banking sector and US inflation expectations weighed heavily. Also, of note metal prices and worry in China with efficiency of the economy reopening have dulled global sentiment. The long-term double bottom base at 0.6570 has held up of late with setbacks being well supported here. We await US Retail Sales and Australian Jobs data this week.

Current Level: 0.6708
Resistance: 0.6800
Support: 0.6600
Last Weeks Range: 0.6636 (0.6812)

The recent rally in the New Zealand Dollar (NZD) from 0.5530 (1.8080) to 0.5800 (1.7230) came to an end Friday against the Euro (EUR) reversing back to 0.5700 (1.7550) into early Tuesday. The risk off tone may be the start of a trend reversal as the pair starts to track back to the long-term April low of 0.5530 (1.8080). Certainly, price reflects recent discussion around the EU growing at a faster pace in 2023 than first thought supported by energy prices easing and a strong labour market. The EU said the quarterly GDP is expected to grow in the Eurozone 1.1% in 2023 much higher than the 0.9% increase forecast back in February.

Current Level: 0.5745 (1.7406)
Resistance: 0.5810 (1.7500)
Support: 0.5715 (1.7220)
Last Weeks Range: 0.5696-0.5814 (1.7198-1.7554)

After the massive “about turn” from last week’s 1.9700 level the English Pound (GBP), New Zealand Dollar (NZD) has settled around 0.5000 (2.000) Monday. The recent strength in the GBP looks to have put it into over territory with the UK facing a recession. The economic downturn predicted in the second half of 2023 could weigh on sentiment and put large downward pressures on the Pound. The New Zealand “wellbeing” Budget is released Thursday at 2.00pm. We shouldn’t get the massive currency moves of old happening around the publication, but we may still see a little volatility. We expect the kiwi to push back this week.

Current Level: 0.4991 (2.0036)
Resistance: 0.5050 (2.0140)
Support: 0.4965 (1.9800)
Last Weeks Range: 0.4962-0.5053 (1.9788-2.0153)

The Australian Dollar (AUD) extended gains Monday to 1.0760 (0.9295) from last week’s run from 1.0600 (0.9435) breaking above key moving average support lines. Long term resistance at 0.9435 (1.0600) held Friday as we suggested, the double top formation of Dec 2022. This week on the economic docket we have Australian employment data and the NZ budget. Downside bias remains in the cross unless we see improvement in metal prices and the Chinese narrative improve.

Current Level: 0.9316 (1.0728)
Resistance: 0.9430 (1.0860)
Support: 0.9210 (1.0600)
Last Weeks Range: 0.9310-0.9431 (1.0603-1.0740)

The New Zealand Government has already said “don’t expect too much from this year’s annual budget”. The economy is close to stalling with inflation well over cooked. With Cyclone Gabrielle devastating parts of the country with massive clean-up and rebuilding cost required, it all leads to a deficit leading into the 2025 budget year. Risk off conditions rallied the greenback Thursday with more stress around the banking sector. US inflation expectations remain high with Fed member Bowman supporting further hikes, saying recently that recent CPI and employment reports have not provided consistent evidence that inflation is on a downward trajectory. NZ inflation expectations have fallen to 2.79% in the first Q down from 3.3% in the 4th quarter, the first time the data has been below 3.0% since 2021, this doesn’t mean the RBNZ are out of the woods just yet. Upside bias in the kiwi looks limited.

Current Level: 0.6252
Resistance: 0.6360
Support: 0.6100
Last Weeks Range: 0.6180-0.6382

Market Overview

• NZ Net migration continues to improve from February 2022’s low of -19,000, net migration in March was a healthy 65,000.
• Currency crosses are up overnight after the strong US Dollar rally from Friday.
• G7 countries plan to ban the restart of Russia’s gas imports on the same routes where they previously cut supplies.
• Talk of the Fed has finished hiking interest rates may lead equity markets higher.
• Westpac are suggesting the RBNZ will raise rates to 6.0% and retain until mid-2024.
• Argentina raises cash rate 600 points to 97%
• Canada April housing starts 262k vs 220k predicted with immigration strong and builders going back to work.
• Japanese machine Rodgers down 14.4% y/y, a small improvement on the earlier 15.2% slide.
• The US Dollar (USD) has been the best performer the past week while the New Zealand Dollar (NZD) has been the worst performing currency. Read more