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The New Zealand Dollar (NZD) has outperformed the Euro (EUR) over the week lengthening its hold from 0.5880 (1.7000) to this morning’s 0.6025 (1.6600). The Euro has done reasonably well agst the main board of currencies to be fair with slightly better Eurozone PMI data printing better than predicted but couldn’t compete with a 75-point hike and NZD surge post the RBNZ release. The Reserve Bank of New Zealand hiked their interest rate a whopping 0.75% as widely predicted, Governor Orr staunch in his interpretation of what needs to be done to bring down inflation. Taking a proactive approach earlier may have saved the economy from a pending recession. Eurozone y/y CPI estimate is Wednesday, it’s hard to not see the kiwi pushing higher into the weekly close.

The current interbank midrate is: NZDEUR 0.6013 EURNZD 1.6630
The interbank range this week has been: NZDEUR 0.5946- 0.6037 EURNZD 1.6563- 1.6817

UK PMI data came in above expectations at 48.8 vs 48.0 improving the GBP yesterday to 0.5160 (1.9370) against the New Zealand Dollar (NZD). Analysts however are still predicting a steep fall in business activity over the coming months with prospects of a UK recession likely. Meanwhile the RBNZ raised their interest rate 75 points as planned to 4.25% Wednesday the cross spiking to 0.5215 (1.9170) briefly on the news. Governor Orr said peak estimates are now at 5.5% in Q3 2023 from 4.10% in Q2 2023. Looking into next week the calendar is light indicating big ticket themes will be the main driver. Downside risk remain in the pair.

The current interbank midrate is: NZDGBP 0.5165 GBPNZD 1.9361
The interbank range this week has been: NZDGBP 0.5155- 0.5216 GBPNZD 1.9171- 1.9395

The US Dollar (USD) has been hit hard this week as risk conditions improved, however the safe haven buy may come back into play at some point together with the Federal Reserve signalling further interest rate rises. Today and through to the close of the week should be thin trading on account of the US Holiday break. The New Zealand Dollar (NZD) rose to 0.6285 early today in the aftermath of the RBNZ raising rates 0.75% to 4.25% the highest it’s been since December 2008 -GFC. Governor Orr resolute with his decision to keep raising rates hard until signs of a slowing inflation are seen. It’s a fine line between tipping the country into recession by strangling growth. It’s arguable the RBNZ should have done more earlier. With wage growth yet to really filter through, we could yet see NZ inflation go higher than the current 7.2% putting more strain on interest rates and ultimately consumer pockets. The kiwi may retest 0.6450 resistance over the coming days.

The current interbank midrate is: NZDUSD 0.6259
The interbank range this week has been: NZDUSD 0.6083- 0.6289

The New Zealand Dollar (NZD) extended gains on the Australian dollar (AUD) this week, the cross reaching 0.9335 (1.0710) before settling around 0.9260 (1.0800) into Friday. The highest level since late March 2022 as the kiwi rally continues from the 0.8710 (1.1480) reversal late September. RBA’s Lowe said he was by no means done with tightening policy and the path is not predetermined but data driven. The RBNZ hiked rates 75 points to 4.25% as predicted, Orr saying inflation needs to return to the 1-3% band, cost of living is far too high, and employment is beyond the maximum sustainable level. Looking ahead, next week’s data looks thin, we expect the kiwi to remain well supported for a while.

The current interbank midrate is: NZDAUD 0.9248 AUDNZD 1.0803
The interbank range this week has been: NZDAUD 0.9216- 0.9336 AUDNZD 1.0711- 1.0850

Risk off markets late last week has seen the Euro (EUR) jump from 1.5270 (0.6550) levels to 1.5540 (0.6435) this morning, the Australian Dollar (AUD) again under pressure. The ECB has again warned of recession risks with Lagarde saying chances have increased based on recent incoming economic data. She also highlighted bringing down inflation was key and raising rates beyond forecast numbers may be needed at the detriment of restraining growth. High natural gas prices caused by the Russian invasion of Ukraine and bottlenecks of supply post coronavirus lockdowns is partly to blame. The cross may struggle to push past support at 0.6380 (1.5670) the Feb 2022 low.

Current Level: 0.6447 (1.5511)
Resistance: 0.6535 (1.5700)
Support: 0.6370 (1.5300)
Last Weeks Range: 0.6431-0.6555 (1.5255-1.5549)

The British Pound (GBP) extended moves higher against the Australian Dollar (AUD) Monday to 0.5585 (1.7900) from 0.5730 (1.7460) mid last week as risk sentiment waivers. UK inflation for October grew to 11.1% y/y from 10.1% in September higher than the 10.7% forecast representing the biggest read since October 1981 with the main drivers being energy and food prices. Meanwhile Aussie job’s numbers showed 32,000 new people entered the workforce in October up from estimates of 15,000. The Unemployment rate dropped to 3.4% from 3.5% but with a slight drop to the participation of 66.5%. Overall, the data shouldn’t alter the RBA tightening course with more 50-point hike shifts to continue. We think a retest of the prior low at 0.5510 (1.8150) may come into play over the week.

Current Level: 0.5583 (1.7911)
Resistance: 0.5715 (1.8100)
Support: 0.5520 (1.7500)
Last Weeks Range: 0.5607-0.5728 (1.7458-1.7834)

Upside moves in the Australian Dollar (AUD) to 0.6795 against the US Dollar (USD) have been replaced by risk off, the AUD falling back to 0.6595 Tuesday morning. The safe-haven USD has come into play again after covid stricken China is again reporting its first deaths in over 6 months creating worry. Focus this week will remain on the Feb outlook with a slew of Fed members speaking amid expected volatility as the US breaks for Thanksgiving holidays. Overall risks in the cross remain to the downside with the recent rally stalling and the chances of an extension of the recent long-term decline.

Current Level: 0.6606
Resistance: 0.6700
Support: 0.6520
Last Weeks Range: 0.6632-0.6797

The Euro (EUR) was under pressure in early week action extending losses from last week through to 0.6010 (1.6635) in early Tuesday before the New Zealand Dollar (NZD) gave back gains to 0.5950 (1.6800) as I write. Risk off moves dominate this morning as equities are down around 1%. Eurozone recession worries have again been in the spotlight with Lagarde saying general risks have increased. On the economic docket this week is the RBNZ rate statement and cash rate release. It’s widely expected the central bank will continue with its aggressive tightening campaign and hike 75 points to 4.25% on its way to 5.0% data dependant. The kiwi may target 0.6000 (1.6660) this week.

Current Level: 0.5949 (1.6809)
Resistance: 0.6015 (1.7100)
Support: 0.5850 (1.6630)
Last Weeks Range: 0.5877-0.5977 (1.6729-1.7013)

UK Inflation hit a new high of 11.1% the biggest number in 41 years for the month of October as food, energy and transport costs balloon out. The New Zealand Dollar (NZD), British Pound (GBP) traded lower post release to 0.5155 (1.94) levels, overall, over the week’s action was mostly sideways. UK’s Finance Minister Jeremy Hunt delivered his tax and spending budget Thursday unveiling a 5.5B fiscal plan as he sought to restore some credibility in the new PM Sunak’s govt. Millions of people will be paying higher taxes and higher energy costs. The wash up is that estimates are now for the UK economy to dive into recession early 2023 as growth is predicted to contract by 1.4%. With the RBNZ expected to hike interest rates 75 points to 4.25% this week downside movement should be limited.

Current Level: 0.5153 (1.9406)
Resistance: 0.5215 (1.9670)
Support: 0.5085 (1.9170)
Last Weeks Range: 0.5136-0.5211 (1.9188-1.9467)