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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

The Euro (EUR) pushed through to 0.6035 (1.6570) Thursday against the New Zealand Dollar (NZD) extending its run off 0.6170 (1.6200) Monday better bid based on a risk off sentiment and the ECB raising rates. The ECB has joined other central banks in raising cash rates 75 points in one hit, the ECB overnight hiking to 1.25%. They have signalled further hikes but will weigh up how much based on prospects of a recession. The overall situation fundamentally for the EUR will continue to be problematic with the currency staring down a deepening energy disaster.

Exchange Rates:
The current interbank midrate is: NZDEUR 0.6062 EURNZD 1.6496
The interbank range this week has been: NZDEUR 0.6034- 0.6162 EURNZD 1.6226- 1.6572

The New Zealand Dollar (NZD) underperformed over the week against the US Dollar (USD) falling briefly below 0.6000 the figure to 0.5995 recovering to 0.6050 into Friday sessions. The move lower a by-product of markets digesting global themes, Fed hawkishness and consequences of deteriorating energy markets with costs ballooning. The Fed seen to be on a path to raise rates again later this month to 3.25% , Powell saying he will continue with the tightening cycle to reduce inflation even if it increases unemployment. Next week’s NZ GDP for the second quarter will confirm in the NZ economy officially drops into a recession. Growth predictions are expected to print just above zero. The kiwi will be doing well to hold 0.6000 in the coming days.

Exchange Rate:
The current interbank midrate is: NZDUSD 0.6068
The interbank range this week has been: NZDUSD 0.5995- 0.6127

It’s been a bit of a nothing week for the British Pound (GBP), New Zealand Dollar (NZD) with not a lot to report data wise. The GBP recovered off 0.5320 (1.8800) levels to 0.5235 (1.9100) and came into Friday around 0.5265 (1.9000) on the news the Queen had died. Very sad. Against the US Dollar the Pound has dropped to its lowest level of 1.14 since 1985 after the GBP came under pressure from dovish remarks made by BoE speakers and criticism around the proposed energy bill plan. Next week’s UK CPI y/y and Bank of England official cash rate should give us excitement with predictions of a hike of 50 points to 2.25%

Exchange Rates:
The current interbank midrate is: NZDGBP 0.5266 GBPNZD 1.8989
The interbank range this week has been: NZDGBP 0.5230- 0.5323 GBPNZD 1.8784- 1.9120

Off the weekly open the Australian Dollar (AUD) initially tracked lower to 1.11 (0.9010) levels against the New Zealand Dollar (NZD) but soon stabilised around the 1.1140 (0.8975) area where it has been most of the week. The RBA didn’t disappoint when they hiked a further 0.5% to 2.35%, the fifth consecutive hike since May as governor Low is committed to returning inflation to the 2-3% band. The path to lower inflation is a narrow window with uncertain times ahead and economic data starting to deteriorate which could lead to a faster recession if the central bank gets this wrong. Looking ahead we have NZ GDP q/q Thursday followed by Aussie employment data. The NZ economy is toying with recession, it will be a close call. Aussie buyers should keep the upper hand for a while.

The current interbank midrate is: NZDAUD 0.8971 AUDNZD 1.1138
The interbank range this week has been: NZDAUD 0.8946- 0.9007 AUDNZD 1.1102- 1.1178

European stocks remain in the red Monday with general currency flows thin from the US Holiday. The Australian Dollar (AUD) is holding firm around the 0.6850 (1.4600) areas vs the Euro (EUR) after moving away off 0.6780 (1.4750) levels late in the week. I wouldn’t imagine the Euro will be continuing its push into the 150.00 zone any time soon with the continued stresses of a recession imminent a biproduct of massive inflation and the ongoing energy crisis. The ECB will hike their interest rate 75 points later in the week to 1.25% which will create excitement and volatility, most of this rise is already priced into the weakened EUR however comments by President Lagarde will be crucial.

Current Level: 0.6842 (1.4615)
Resistance: 0.6970 (1.4900)
Support: 0.6710 (1.4350)
Last Weeks Range: 0.6783-0.6936 (1.4417-1.4741)

The Australian Dollar (AUD) stabilised around the 0.5880 (1.7000) areas over the last few days against the British Pound (GBP) but looks to make further moves north. Monday’s daily close at 0.5925 (1.6880) is the highest since September 2017. Looking at the calendar this week we have key RBA and GDP q/q releasing. The Central Bank will raise rates by 50 points to 2.35% later today, if they raise to hard the fear is they could tip the economy into recession. The economy feels the impact of high rates fast unlike other economies because around 60% of home loans are variable not fixed. 2.35% is not outside the realms of being “unreasonably” high – the last time was during 2014 after coming down from the fallout of the GFC at 4.75% in 2011. The cross is setting up to post a fresh high this week.

Current Level: 0.5885 (1.6992)
Resistance: 0.5930 (1.7050)
Support: 0.5865 (1.6860)
Last Weeks Range: 0.5865-0.5926 (1.6873-1.7049

Prices continue to ease in the Australian Dollar (AUD), US Dollar (USD) cross, extending declines to 0.6770 Monday – the July low. The strain of “higher for longer” central bank policy is hanging over markets and will continue to deteriorate growth outlook. The RBA will hike rates today to 2.35% continuing their rapid rate hike plan to combat inflation. Some argue this tightening is too fast, others just a normal cycle not outside “neutral” ranges. The threat by the RBA is they create a stagnant economy and enter a recession later in 2022 early 2023. The chart is presenting a series of lower highs followed by lower lows going back to the start of 2022. Analysis of the current pattern highlights a possible retest of 0.6680 and a drift lower to 0.6600 “fib” support.

Current Level: 0.6814
Resistance: 0.7000
Support: 0.6690
Last Weeks Range: 0.6769-0.6955

With US holiday Monday affecting flow the New Zealand Dollar (NZD), Euro (EUR) cross has been pivoting off 1.6290 in the initial stages as the cross awaits directional cues. Russia says the Nord stream shutdown is because of sanctions introduced by western countries. The only turbine running is now malfunctioning causing stoppages. Meanwhile, Eurozone Retail Sales came in at 0.3% vs 0.4% predicted rising in July but slightly weaker than expected, the main increases were tied into fuels, food and tobacco. Consumer confidence continues to slump in the area to the lowest read since May 2020 as recession risks loom as the region heads into winter. With exception of the financial crisis in 2009 investors’ perception of where the economy is headed hasn’t been this bad for over two decades. The ECB will hike their benchmark rate Friday from 0.5% to 1.25%, expect big volatility around this release.

Current Level: 0.6133 (1.6305)
Resistance: 0.6210 (1.6500)
Support: 0.6060 (1.6100)
Last Weeks Range: 0.6069-0.6179 (1.6183-1.6477)