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The New Zealand Dollar (NZD) reached a fresh high of 0.9550 (1.0470) against the Australian Dollar (AUD) to close out the week the highest levels since December last year. Central bank divergence has been the main catalyst for the recent giant move in the kiwi from 0.8700 (1.1500) levels back in September. The outlook is for more tightening to take place for the RBNZ and not enough for the RBA, the scenario is priced into the “rates curve” with sentiment and a shift back to a more neutral policy view down the road supporting a possible trigger of a reversal towards 0.9000 (1.1100). Push backs by the Aussie this week have price back around 0.9390 (1.0650). No data is due on the docket for the cross until 11 Jan 2023 Australian CPI release. Prices above 0.9350 represent good buying of AUD.

The current interbank midrate is: NZDAUD 0.9380 AUDNZD 1.0643
The interbank range this week has been: NZDAUD 0.9372- 0.9545 AUDNZD 1.0476- 1.0669

FX Update:

This will be our last commentary for 2022. We will be back with our first commentary for the 2023 year in the second week of January.
We appreciate all your comments and support over what has been an incredible year!
We are only closed for the statutory holidays and will be open for dealing on the days in between Christmas and New Year.

We would like to wish all our clients a Merry Christmas and safe start to what we all hope will be a prosperous New Year.
The Direct FX Crew; Nev, Glenn, Sean, and team Read more

Monday 19/12
10pm, EUR, German iso Business Climate
Forecast: 87.6
Previous: 86.3

Tuesday 20/12
1:30pm, AUD, Monetary Policy Meeting Minutes
Tentative, JPY, BOJ Press Conference
Tentative, JPY, Monetary Policy Statement

Wednesday 21/12
2:30am, CAD, Core Retail Sales m/m
Forecast: 1.50%
Previous: -0.70%
2:30am, CAD, Retail Sales m/m
Forecast: 1.50%
Previous: -0.50%

Thursday 22/12
2:30pm, CAD, CPI m/m
Forecast: -0.10%
Previous: 0.70%
2:30pm, CAD, Median CPI y/y
Forecast: 4.90%
Previous: 4.80%
2:30pm, CAD, Trimmed CPI y/y
Forecast: 5.30%
Previous: 5.30%
2:30pm, CAD, Common CPI y/y
Forecast: 6.10%
Previous: 6.20%
4pm, USD, CB Consumer Confidence
Forecast: 101
Previous: 100.2

Friday 23/12
8:30am, USD, Final GDP q/q
Forecast: 2.90%
Previous: 2.90%
2:30am, USD, Unemployment Claims
Forecast: 224K
Previous: 211K

Saturday 24/12
3:45am, CAD, GDP m/m
Forecast: 0.10%
Previous: 0.10%
3:45am, USD, Core PCE Price Index m/m
Forecast: 0.20%
Previous:0.20%

The Australian Dollar (AUD) climbed another leg higher earlier in the week reaching 0.6890 against the US Dollar (USD) the highest level since early September. The Federal Reserve hikes their cash rate this morning from 4.0% to 4.50% as widely predicted but with projections of further hikes on the radar. The Fed expects to raise to between 5.0% and 5.5% in 2023 even after a softer inflation read earlier in the week. US CPI y/y published at 7.1%, down on the 7.3% expected with declines in energy prices. Over the following months housing will be the determining factor as to whether it guides the economy clear of higher inflation or not. With higher mortgage rates expected to hit the pocket over the next few months this will no doubt strain consumer demand. Today’s Australian employment data prints and could offer further upside. Certainly, if we look at recent chart trends a retest of 0.7000 could be on the cards.

The current interbank midrate is: AUDUSD 0.6863
The interbank range this week has been: AUDUSD 0.6720- 0.6893

The New Zealand Dollar (NZD) continues to outperform the US Dollar (USD) pushing up to 0.6490 this morning the highest level in the cross since June. The Federal Reserve unanimously raised rates 50 points as predicted this morning to 4.5%, the highest cash rate since 2007. Talk suggested they will continue hiking to over 5% in early 2023, notably higher than previously expected. Meanwhile earlier in the week US Inflation came in lower than predicted at 7.1% year on year after 7.3% was forecast. The Fed is making slow progress with their fight against inflation- leading the way is recent price declines in energy. Third quarter NZ GDP came in at 2.0% vs 0.8% predicted showing expansion for the second straight quarter after 1.9% in the June to August quarter. Looking ahead we have US Retail Sales printing early tomorrow. We expect more upside for the kiwi with a possible retest over the coming days of 0.6570

The current interbank midrate is: NZDUSD 0.6455
The interbank range this week has been: NZDUSD 0.6346- 0.6514

Momentum in the New Zealand Dollar (NZD) continued into Wednesday against the struggling Australian Dollar (AUD) with price reaching 0.9510 (1.0515) a fresh 2022 high before the Aussie found much needed support, the currency improving to 0.9400 (1.0640) this morning. The recent strength in the kiwi has been rather tough to explain, perhaps central bank policy has been the catalyst for such a big reversal off September’s 0.8720 level to where it is today. NZ quarterly GDP ending 30 September came in a whopping 2.0% instead of the 0.8% markets were predicting shifting price in the cross to 0.9435 (1.0600) from 0.9400 (1.0640). We await Australian Job’s data later today. Buyers of Aussie should consider levels here as we don’t foresee this area holding.

The current interbank midrate is: NZDAUD 0.9404 AUDNZD 1.0624
The interbank range this week has been: NZDAUD 0.9380- 0.9510 AUDNZD 1.0515- 1.0660

Key Points:

Fed’s Powell came out hawkish at this morning’s Federal Reserve policy meeting with the greenback broadly rallying off the back of his statement. Markets have since called his bluff with the big dollar back at pre-Fed levels.
Airlines around the world are reporting softer demand post covid opening as consumers consider personal spending
A German recession is now predicted to be milder than expected
Forecast modelling in China suggest economic growth in 2023 is not going to be as bad as initially predicted
The RBA should hike interest rates by 25 points at each of the next two meetings, their next release is 7 February Read more

Monday 12/12
8pm, GBP, GDP m/m
Forecast: 0.40%
Previous: -0.60%

Tuesday 13/12
9:25am, CAD, BOC Gov Bailey Speaks
2:30am, GBP, Claimant Count Change
Forecast: 3.5K
Previous: 3.3K

Wednesday 14/12
12am, GBP, BOE Gov Bailey Speaks
2:30am, USD, CPI m/m
Forecast: 0.30%
Previous: 0.40%
2:30am, USD, CPI y/y
Forecast: 7.30%
Previous: 7.70%
2:30am, USD, Core CPI m/m
Forecast: 0.30%
Previous: 0.30%
11:30am, AUD, RBA Gov Lowe Speaks
8pm, GBP, CPI y/y
Forecast: 10.90%
Previous: 11.10% Read more

The RBA raised their cash rate 25 points Tuesday to 3.25% from 2.85%. A hawkish RBA tone sent the Australian Dollar (AUD) lower off the news against the Euro to 0.6380 (1.5680) then to 0.6360 (1.5730) into Wednesday a February 2022 low as more “carry traders” departed. Price down here didn’t hold, the Aussie clawing back losses to 0.6420 (1.5620) on this morning’s open.. Growth for the third quarter came in at a reasonable 0.6% not quite the 0.7% markets were predicting as the annual number dropped from 6.2% to 5.9%. Forecasts have growth predicted to slow over the coming 18 months. Further downside for the Aussie is on the cards leading into Christmas.

Current Level: 0.6397 (1.5632)
Resistance: 0.6560 (1.6200)
Support: 0.6170 (1.5240)
Last Weeks Range: 0.6391-0.6567 (1.5227-.5645)

The Australian Dollar (AUD) is still one of the worst performing currencies. Tuesday’s RBA cash rate announcement was underwhelming, with Governor Lowe increasing the rate 25 points from 2.85% to 3.10% as predicted, against the British Pound (GBP) it was relatively unmoved post release. Comments from the central bank suggested there are still upside risks to inflation, expected to hit 8.0% by the end of the year. Third quarter growth printed at 0.6% down from 0.7% expected but healthy enough with spending still on the rise despite weaker commodity prices such as iron ore resulting in declines. The less attractive AUD has seen price push through long term support at 0.5525 (1.8100) levels to 0.5480 (1.8250) this morning the lowest since February this year. We expect to see more of the same.

Current Level: 0.5508 (1.8155)
Resistance: 0.5635 (1.8450)
Support: 0.5420 (1.7750)
Last Weeks Range: 0.5527-0.5649 (1.7702-1.8091)