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Tuesday 15/11
1:30pm, AUD, Monetary Policy Meeting Minutes
8:00pm, GBP, Claimant Count Change
Forecast: 17.3K
Previous: 25.5K

Wednesday 16/11
2:30am, USD, Empire State Manufacturing Index
Forecast: -5
Previous: -9.1
2:30am, USD, PPI m/m
Forecast: 0.50%
Previous: 0.40%
1:30pm, AUD, Wage Price Index q/q
Forecast: 0.90%
Previous: 0.70%
8:00pm, GBP, CPI y/y
Forecast: 10.50%
Previous: 10.10% Read more

The Euro (EUR) continues to push higher against the Australian Dollar (AUD) reaching 1.5580 (0.6420) early this morning off 1.5400 (0.6495) levels as the currency benefits from a hawkish ECB tone. ECB’s Nagel was on the wires saying the ECB would continue to raise interest rates even at the detriment of growth and economic health. The Eurozone economy is predicted to shrink over the winter months from a combination of higher heating/energy costs and poor global demand and high borrowing costs. An EU economic forecast is due this Friday which will give us a look at the next 2 years of variables. A retest of the long term low at 0.6385 (1.5660) looks likely over the coming days.

Current Level: 0.6413 (1.5593)
Resistance: 0.6515 (1.5700)
Support: 0.6370 (1.5347)
Last Weeks Range: 0.6427-0.6547 (1.5270-1.5558)

Recession fears in the UK have dampened buying of British Pound (GBP) in recent days after an early week surge to 0.5620 (1.7800) its back around 0.5680 (1.7600) levels this morning. JP Morgan have predicted post a recession this would leave the economy 10% lighter than pre covid times. A very significant shift which will impact UK consumers bigtime as the cost of living rises over the following 1-2 years. A lack of tier 1 data early in the week has left the cross subjected to “risk” moves. Key data Friday is UK GDP m/m which will print in the negative – just a question of how bad. Also, the UK fiscal plan which could support the GBP.

Current Level: 0.5652 (1.7692)
Resistance: 0.5750 (1.8200)
Support: 0.5500 (1.7400)
Last Weeks Range: 0.5517-0.5720 (1.7482-1.8123)

The Australian Dollar continued its run north early week to 0.6545 against the US Dollar (USD) before slipping back as equity markets turned red. As markets digest the midterm election results in the US the Aussie fell back on speculation the Republicans are set to take over the “house” while the outcome for the senate is still being counted. US CPI prints tonight with expectations inflation may actually cool a tad y/y from 8.2%. The Fed won’t let inflation get away from them so will target another 75-point hike next month. Risk off may continue as the election draws to a result, the Aussie may drift lower.

Current Level: 0.6421
Resistance: 0.6680
Support: 0.6180
Last Weeks Range: 0.6272-0.6490

After 4 weeks of solid momentum for the New Zealand Dollar (NZD) as it climbed to 0.6000 (1.6680) against the Euro (EUR), the kiwi has given back gains this week falling to 0.5880 (1.7015) into early Thursday. A hawkish tone by ECB’s Nagel said more rises are necessary as the Eurozone inflation accelerated recently to 10.7%. This is the highest since 2009, predicted to stay above the target zone of 2% through 2024. There is a high probability the Eurozone will fall into recession later this year. The risk driven kiwi may struggle into the close.

Current Level: 0.5869 (1.7038)
Resistance: 0.5940 (1.7440)
Support: 0.5735 (1.6840)
Last Weeks Range: 0.5825-0.5991 (1.6691-1.7165)

The British Pound (GBP) was bid Monday reversing some of the previous week losses as it reached 1.9445 (0.5140) against the New Zealand Dollar (NZD) The Bank of England (BoE) are expected to keep raising rates to combat inflation as GDP forecasts for the following couple of years worsen. The UK economy is expected to contract 1.6% in 2033 and a 0.5% in 2024 as citizens brace for a massive cost of living squeeze. Looking ahead we have UK m/m GDP Friday. We expect the kiwi to kick on towards the weekly close.

Current Level: 0.5173 (1.9331)
Resistance: 0.5235 (1.9640)
Support: 0.5090 (1.9100)
Last Weeks Range: 0.5002-0.5232 (1.9110-1.9989)

New Zealand’s 2-year inflation forecast rose to 3.62% the highest since 1991 from low 3.0’s which weakened the kiwi to 0.9115 (1.0970) against the Australian Dollar (AUD) into Thursday sessions. Adding to this negativity was the news that the Reserve Bank of New Zealand Governor Adrian Orr had been re-appointed for another 5 years under strong criticism who will deliver another 50 points later this month. Some suggested no independent review had been carried out to ascertain his performance prior to another 5 years being signed off. With a recent surge in metal prices i.e., coal and iron ore- expected to improve based on China’s reopening post covid lockdowns we may see the Aussie improve towards year end.

Current Level: 0.9150 (1.0922)
Resistance: 0.9235 (1.1000)
Support: 0.9090 (1.0830)
Last Weeks Range: 0.9047-0.9211 (1.0856-1.1053)

The US Dollar (USD) strengthened across the board midweek- the New Zealand Dollar (NZD) failing to hold Tuesday’s 0.6000 and drifted back to 0.5880 this morning. Midterm US elections are driving currencies mainly at the moment while we wait for results to come through. It looks like the Republicans will take control of the House of Representatives while the margin for the Senate still remains tight. Equity markets came off around 2% overnight as economic stability waned. Meanwhile we have the upcoming US CPI in focus with predictions this may ease lower from 8.2% y/y in October. Election event risk will drive the cross into the close, tough to know how the kiwi will react.

Current Level: 0.5877
Resistance: 0.6080
Support: 0.5730
Last Weeks Range: 0.5737-0.5939

Market Overview

Key Points:

• US midterm elections are in progress with predictions the Republicans will take over the House of Representatives, meanwhile the race for the Senate is tight
• The Reserve Bank of New Zealand Monetary Policy Review this morning suggests the high inflation could have been lessened if Ore had hiked earlier
• Some analysts are suggesting the Fed may take interest rates all the way to 6.0% before starting to ease.
• Russia has ordered the withdrawal from the city of Kherson, a major victory for Ukraine which will make it harder for Russia to push west, some think this could be a game plan before the Russians destroy the Dnieper River Dam- the biggest Hydro station in Ukraine.
• The German economy is predicted to contract 0.2% in 2023
• RBA’s Bullock spoke yesterday saying further rate hikes will be required – data dependant
• China has again extended their support for struggling property developers by boosting the 2018 program to 250B Yuan
• The Swiss Franc (CHF) is the strongest currency this week while the New Zealand Dollar (NZD) has been the worst performer. Read more