Directfx admin

The New Zealand Dollar (NZD) clocked its lowest price of 0.8707 (1.1485) mid last week against the Australian Dollar (AUD) since November 2013. Both RBNZ and RBA central banks come out to play this week with both predicted to raise rates by 50 points to 3.5% and 2.85% respectively. It will be the 8th straight rise for the RBNZ while just the sixth for the RBA. Governor Lowe seems to believe they are close to slowing tightening to 25 point moves in efforts to not choke the economy into recession. We should see the normal volatility around both releases with rhetoric being the key for determining ongoing tightening viewpoints. As we have been saying for week’s – Aussie buyers should consider options.

Current Level: 0.8789 (1.1366)
Resistance: 0.8890 (1.1500)
Support: 0.8695 (1.1250)
Last Weeks Range: 0.8705-0.8837 (1.1315-1.1487)

The New Zealand Dollar (NZD) closed the week around 0.5590 against a rampant US Dollar (USD) just off the midweek low at 0.5560 the March 2020 level. US Dollar (USD) strength remains a key factor across currencies with the Federal Reserve defiant they will continue with their steep tightening cycle in the wake of deepening recession prospects. Predictions are for the US economy may face a hard landing in 2023 with a tight labour market and reports the housing market is turning amid a market which is highly leveraged- a sign for tough times ahead. Meanwhile the September PMI index is down, the lowest since September 2020 putting the big dollar under pressure into Tuesday. The RBNZ are setting up for their fifth consecutive hike Wednesday of 50 points, Orr saying earlier he sees the tightening cycle as “mature” and “well advanced”. It’s hard to see any signs of a decent  reversal higher in the pair but we could see a spike around the cash rate release.

Current Level: 0.5720
Resistance: 0.5840
Support: 0.5560
Last Weeks Range: 0.5564-0.5748

• Equity markets bounce back over 2% on the day taking risk currencies along for the rise
• Markets had previously priced in a 50-point hike today by the RBA, but this has changed to a 50/50-, 50- or 25-point hike
• Markets have turned from the view of speculating on a global recession to pricing one in 
• Fed’s Williams sees inflation cooling but underlying pressures remain – global supply chain woes easing   
• Japanese media are reporting North Korea have launched a missile and people in Hokkaido should seek shelter, Japan’s second largest Island
• Ukrainian troops take back four provinces in Ukraine after advancing several kilometres
• The British Pound (GBP) was the strongest currency last week while the US Dollar (USD) is the worst performing

Sunday 02/10
AUD, Daylight Saving Time

Monday 03/10
AUD, All Day, Bank Holiday
CNY, All Day, Bank Holiday
EUR, ALL Day, Bank Holiday

Tuesday 04/10
3am, USD, ISM Manufacturing PMI
Forecast: 52.5
Previous: 52.8
All Day, CNY, Bank Holiday
4:30PM, AUD, Cash Rate
Forecast: 2.85%
Previous: 2.35%
4:30PM, AUD, RBA Rate Statement Read more

Market Overview:

Key Points:
• The World Bank has slashed economic growth in China for 2022
• RBNZ’s Orr says there is still room to continue tightening policy/interest rates however the cycle is well advanced
• Predicted Federal Reserve hikes: November 75 points, December 50 points, January 2023 25 points and February 2023 also 25 points
• Markets have turned from the view of speculating on a global recession to pricing one in
• The Bank of Japan (BoJ) has intervened in the Japanese Yen for the first time in over two decades to stem the collapse of the currency. We expect more of this to take place- the (JPY) is trading at 144.80 agst the greenback after returning from 140.00 post the headline
• The British Pound (GBP) has slid to its lowest level against the US Dollar on record sinking Monday below the previous Feb 1985 level to 1.0274
• US Dollar index is predicted to be above 118 at year end from 114 now, this suggests further downward bias in store for crosses
• The US Dollar (USD) has been the strongest currency in September while the British Pound (GBP) and New Zealand Dollar (NZD) have been the worst performing Read more

The Euro (EUR) continues to trade down off the recent late August high of 0.7000 (1.4270) pushing back to 0.6710 (1.4910) today. The Euro did take on water late in the week as eurozone consumer sentiment hit a record low and manufacturing contracted further. ECB President Lagarde spoke Monday saying the economic situation was “darkening” and that inflation was “far too high”. She will continue to raise interest rates at the following meetings with fragile economic prospects and upwardly revised inflation forecasts. Euro flows should continue with prices in the cross possibly to take a look at 0.6515 (1.5350) support over coming weeks.

Current Level: 0.6702 (1.4920)
Resistance: 0.6965 (1.5280)
Support: 0.6545 (1.4360)
Last Weeks Range: 0.6684-0.6778 (1.4752-1.4960)

The collapse of the Pound (GBP) continued off the open Monday with recent moves even more brutal and devastating than before. The cross reaching a monumental high of 0.6315 (1.5840) the October 2016 level before things took a turn and the GBP recovered losses somewhat. Some may remember the carnage of Brexit in June 2016 and what happened to the GBP then, following June’s plummet to 1.7800 (0.5620) it worsened over the following months to clock 1.5760 (0.6345) in October before recovering. We are not far away from plunging back into the unknown regions below 1.5700 (0.6370). Markets are starting to concede that the Bank of England may end up raising rates 1% instead of 0.75% at their next meet. Back at 0.6000 (1.6660) as I write we may continue to see huge shifts continue.

Current Level: 0.5999 (1.6669)
Resistance: 0.6170 (1.7200)
Support: 0.5815 (1.6200)
Last Weeks Range: 0.5847-0.6029 (1.6584-1.7102)

Continued weakness in the New Zealand Dollar (NZD) against the Euro (EUR) drove prices to fresh lows around 0.5860 (1.7070) this morning, the Euro surprisingly on the front foot. Consumer sentiment in the Eurozone hit a record low and poor Manufacturing data Friday wasn’t enough to halt momentum the pair on its way to a Feb 2022 low. European authorities are investigating leaks on the Russian natural gas pipelines to Germany. Pressure issues were found on the Nord Stream and Nord Stream 2 pipelines which connect Russia to Germany’s massive industrial zone. Both these lines are not currently in use so are not affecting the gas supply but if the issue is some sort of sabotage things could escalate fast. A retest of the yearly low at 0.5770 (1.7330) is fast approaching, we think this should hold.

Current Level: 0.5867 (1.7044)
Resistance: 0.5950 (1.7320)
Support: 0.5775 (1.6800)
Last Weeks Range: 0.5898-0.5992 (1.6688-1.6953)

Like all US Dollar (USD) crosses the Australian Dollar (AUD) has been hit hard again diving to 0.6420 this morning clocking a fresh May 2020 low. Equity markets continue to decline amid a hawkish Fed backdrop with Fed members still supporting the theory they need to keep policy tight. US Consumer confidence for September printed above expectations at 108.0 for the second consecutive month supported by jobs, wages and falling gas prices. Pump gas now back down at its yearly low around 3.75 per gallon or 1.00 per litre. On the chart we have thin air through to 0.5800, as the Fed continues to raise rates, we could see more downside materialise.

Current Level: 0.6431
Resistance: 0.6670
Support: 0.6250
Last Weeks Range: 0.6513-0.6745

Confidence in the UK economy and the British Pound (GBP) are fast eroding with the economy expected to accelerate its interest rate hiking to a near high 6.0%. Monday’s trip to the 0.5525 (1.8100) region was unpredicted but a reflection on big picture economic issues coming to the surface. The Pound (GBP), New Zealand Dollar (NZD) rebounded into Tuesday to 0.5250 (1.9040) highlighting current volatility present in the market. It may take a while before we see real GBP performance return, so we predict the currency to remain unsupported for the next while especially while debate over fiscal policy is sorted over the coming weeks. No data to publish this week for the cross.

Current Level: 0.5248 (1.9054)
Resistance: 0.5370 (1.9650)
Support: 0.5090 (1.8620)
Last Weeks Range: 0.5159-0.5306 (1.8845-1.9382)