Directfx admin

The Australian Dollar (AUD) continued its surge higher off Monday’s open reaching 0.6900 early morning Tuesday against the US Dollar (USD) on risk improvement. USD long positions look to have cashed up giving way for a rally of sorts, also equity and commodity rises have also helped to inspire the AUD. We have quite a bit of event risk this week with a full calendar of data releasing. Aussie jobs data should reflect a sharp rebound and a potential drop in unemployment. The main event being US August Inflation with forecast predicting -0.1% m/m. Recent comments from the Fed suggest a soft CPI read won’t persuade them from hiking a further 75 points next week. Fib resistance at 0.6900 suggests we could see a little downside develop in the cross.

Current Level: 0.6883
Resistance: 0.6950
Support: 0.6850
Last Weeks Range: 0.6697-0.6877

Prices in the Euro (EUR), New Zealand Dollar (NZD) Monday reached 0.6030 (1.6580) a 10-week low before pulling back towards 0.6080 (1.6450) into Tuesday sessions. European stocks soured on the news Ukrainian troops had reclaimed a large amount of territory back off Russia Monday pushing Russian forces all the way back to the North-western border. Earlier Lagarde offered a line of credit to European banks amidst the ongoing energy crisis helping the EUR push higher. However long-term currency shifts in the Euro’s favour look limited with long term structural energy prices remaining a massive constraint to European growth. The Euro looks overbought.

Current Level: 0.6064 (1.6490)
Resistance: 0.6160 (1.6600)
Support: 0.6025 (1.6230)
Last Weeks Range: 0.6033-0.6161 (1.6231-1.6573)

Monthly UK GDP for the month of July printed slightly under expectations at 0.2% vs 0.3% expected, markets seeing this as positive, the data helping to push the GBP up to 1.9100 (0.5235) before falling to 1.9000 (0.5265) early Tuesday. Also, of note the Truss govt will be looking to expand energy production and lift the fracking ban. The UK Central Bank will also defer its policy meeting from the original 15th September to the 22nd of this month in light of the Queen’s death. UK CPI prints midweek and is expected to be a big number – over 10.0% y/y. Second quarter NZ growth prints Thursday and is predicted to come in around 1.0% and could give the kiwi a kick higher, it’s not unreasonable that we could see a retest of the prior high of 0.5300 (1.8900)

Current Level: 0.5256 (1.9025)
Resistance: 0.5290 (1.9120)
Support: 0.5230 (1.8900)
Last Weeks Range: 0.5230-0.5325 (1.8784-1.9119)

Prices in the New Zealand Dollar (NZD), Australian Dollar (AUD) have dropped to 0.8914 (1.1220) suggesting ongoing support as we mentioned earlier for the Aussie. A retest of the long term low at 0.8890 (1.1250) looks imminent. Earlier governor Lowe said he expects to raise interest rates over the coming months but slow the pace of tightening. The full effect of interest rates has yet to flow through to higher consumer mortgage payments. Both NZ GDP q/q and Australian job’s data are expected to print well. NZ GDP for the second quarter should reflect an improving economy (1.0%) post covid lockdowns and restrictions. Sellers of AUD should consider with levels back under 0.9000 (1.1100) alluring.

Current Level: 0.8912 (1.1212)
Resistance: 0.9010 (1.1250)
Support: 0.8890 (1.1100)
Last Weeks Range: 0.8917-0.8999 (1.1113-1.1214)

The New Zealand Dollar (NZD) extended last week’s rise from the low of 0.6000 Monday against the US Dollar (USD) edging higher to 0.6160. European and US equities posted gains helping risk currencies to improve. Greenback profit taking has also helped the kiwi recover off the yearly low. The New Zealand economy looks set to possibly avoid dipping into a recession with data out Thursday which should confirm the economy is expected to expand by around 1.0% in the second quarter of 2022. This comes after a contraction in the first quarter of -0.2%. With covid and border restrictions eased the economy has rebounded from the Omicron pandemic. We still have a way to go with ongoing labour  and supply chain material shortages. The long-term chart pattern suggests we could see upside to 0.6300 over coming days.

Current Range: 0.6144
Resistance: 0.6420
Support: 0.6000
Last Weeks Range: 0.5996-0.6152

Market Overview

Key Points:

• Queen Elizabeth II has died at age 96, the longest reigning monarch in British History. Oldest son Charles becomes the new monarch and will be known as King Charles III
• 14 countries recognise the British Monarch as the head of state, over the coming months could we see the unwinding of many to become republics
• US Equities have closed higher- the 4th consecutive day
• Germany has decreased imports of goods from Russia by 45.0% July to July, but the value of goods has increased by 10% to 2.9B highlighting the increased costs of goods and soaring energy prices
• Ukraine troops have taken back a massive chunk of land from Russia freeing more than 20 settlements boosting Ukrainian mood across the country
• The Swiss Franc (CHF) been the strongest currency over the past week while the Japanese Yen (JPY) is the weakest on the main board
• Tens of millions of people over at least 30 regions in China have been ordered to stay home under partial or full lockdowns, residents have been complaining of food and essential item shortages Read more

Monday 12/09
All Day, CNY, Bank Holiday
6:00PM, GBP, Bank Holiday
Forecast: 0.30%
Previous:-0.60%

Tuesday 13/09
1:30PM, AUD, GDP m/m
Previous: 7

Wednesday 14/09
12:30am, USD, NAB Business Confidence
Forecast: -0.10%
Previous: 0.00%
12:30am, USD, CPI m/m
Forecast: 0.30%
Previous: 0.30%
6:00PM, GBP, Core CPI m/m
Forecast: 10.10%
Previous: 10.10% Read more

The Euro (EUR) has rallied to 0.6720 (1.4880) Thursday against the Australian Dollar (AUD) extending early week gains before settling this morning around 0.6755 (1.4800). The European Central Bank hiked their cash rate 75 points to 1.25% overnight joining other central banks in the fight against rising inflation, they signalled they would hike again in the coming months. The ECB is predicted to be at 1.75% early in 2023 but they may pause for a while if looming recession fears become a reality. Earlier the RBA hiked their interest rate by 50 points to 2.35% – the fifth consecutive hike from May 3rd this year, some are arguing this is too much too quick and could tip the economic balance into recession quicker. Momentum in the pair is still to the downside with ongoing Eurozone energy issues.

Exchange Rate:
The current interbank midrate is: AUDEUR 0.6756 EURAUD 1.4801
The interbank range this week has been: AUDEUR 0.6719- 0.6865 EURAUD 1.4566- 1.4881

For most of the week the British Pound (GBP) sat around 0.5860 (1.7060) against the Australian Dollar (AUD) recovering off the early week level of 0.5930 (1.6870) The UK government’s plans to ease the country’s energy crisis may come under massive constraints. Newly appointed Prime Minister Truss plans to cap the energy bill rises to help households. This cost is predicted to be an estimated GBP 170B, funding this will require finesse. The RBA delivered its fifth consecutive rate hike raising 50 points to 2.35%- Lowe saying he had no preconceived idea of exactly where the rate may end up peaking at. Next week’s UK CPI y/y will be one to watch with predictions of well over 10% printing. Fundamentally the GBP still looks heavy

The current interbank midrate is: AUDGBP 0.5871 GBPAUD 1.7032
The interbank range this week has been: AUDGBP 0.5837- 0.5927 GBPAUD 1.6870- 1.7132

The Australian Dollar (AUD) rose briefly post the RBA cash rate release Tuesday to 0.6830 but most of the last few days it has spent time on the backfoot with risk sentiment struggling. The RBA hiked their cash rate 50 points to 2.35% as widely predicted the 5th consecutive hike from May’s 0.10% with some considering the question- have the RBA gone too far too quickly bringing into play a closer recession? Lowe said more hikes will be required but at a slower pace. Lowe is unsure where the peak may be, incoming data should give more clues. The AUD should get relief off the 0.6700 heading into the close.

Exchange Rate:
The current interbank midrate is: AUDUSD 0.6764
The interbank range this week has been: AUDUSD 0.6697- 0.6832