Exchange Rates

UK Inflation Wednesday came in at 5.5% year on year just slightly up on the forecast of 5.4% and will most likely not be a game changer and cause the Bank of England to adjust their monetary policy plans. This is a 30 year high in January and consistent with the view that the BoE will raise rates 3 times between now and August taking the rate to 1.25%. The New Zealand Dollar (NZD) regained last week’s losses against the British Pound (GBP) retracing moves from 0.4880 (2.0480) to Friday’s 0.4920 (2.0330). The recent mood in the markets has been reflecting more calm based on fears of attacks at the Russian/Ukraine border but with more Russian troops arriving things could change quickly. We think the cross will retest recent levels at 0.4870 (2.0520) in the coming days, the early May 2020 low.

Exchange Rates:
The current interbank midrate is: NZDGBP 0.4913 GBPNZD 2.0354
The interbank range this week has been: NZDGBP 0.4880- 0.4935 GBPNZD 2.0260- 2.0488

The New Zealand Dollar (NZD) extended last week’s gains against the Euro (EUR) to 1.6920 into Friday trading, in the face of solid Eurozone data highlighted by Industrial Production. Risk tone has been calm based on the Ukraine/Russian border situation allowing equity markets to click higher and allowing the NZD to hold up well. However the kiwi is very much still at the mercy of geopolitical tensions with recent reports that Russian troops are preparing an attack in the coming days possibly using chemical weapons. Next week’s RBNZ official cash rate Wednesday should reflect a 0.25% rise in the interest rate from 0.75% to 1.0% giving more attractiveness to the kiwi.

Exchange Rates:
The current interbank midrate is: NZDEUR 0.5888 EURNZD 1.6983
The interbank range this week has been: NZDEUR 0.5828- 0.5911 EURNZD 1.6917- 1.7157

More NZD/JPY updates.

4 weeks of losses for the New Zealand Dollar (NZD) came to a halt last week against the Canadian Dollar (CAD) snapping higher off the long term low of 0.8620 to close the week out around 0.8760. Rising covid infections locally have kept the kiwi under pressure of late. Inflation in NZ released at 2.2% q/q much higher than the 1.5% expected pushing the year on year number to 4.9% up from the June quarter of 3.3%. This will almost certainly have the RBNZ thinking over its monetary policy plans with markets rapidly starting to price in a 50 point hike at the November meeting. We expect to see the cross push higher this week.

Exchange Rates
Current Level: 0.8769
Resistance: 0.8850
Support: 0.8630
Last Weeks Range: 0.8617-8762

The Australian Dollar (AUD) has regained its momentum after last week’s late slump, clocking 0.7220 early this morning against the US Dollar (USD). US Core Retail Sales jumped in January 3.3% after December’s -2.8% slump. Also of note US Industrial Production rebounded by 1.4% after an -0.1% dip. Both offered the greenback support, but it was the Fed who came out less hawkish acknowledging price pressures, the Fed concerned of overdoing rate hikes. Aussie job numbers were benign with the Unemployment Rate remaining at 4.2% and adding 12,900 new jobs. Tensions at the Ukraine/Russian border look to be flaring up which could send markets into a risk off mood sending flows back into the greenback.

Exchange Rates:
The current interbank midrate is: AUDUSD 0.7185
The interbank range this week has been: AUDUSD 0.7085- 0.7216

The Euro was well supported early in the week with solid Eurozone economic data highlighted by Industrial Production, however most of the movement since Wednesday has been Aussie positive as the situation at the Ukraine/ Russia Border has been reasonably low key. The Australian Dollar (AUD coming off 0.6280 (1.5930) to clock 0.6345 (1.5760) in early Friday action. Australian jobs data reported nearly 13,000 new jobs were added in January with the unemployment rate remaining at 4.2%- the release benign and having no impact on the cross. US secretary of state Blinken overnight said Russian troops are preparing to launch an attack in the coming days. If this happens last week’s low of 0.6165 (1.6220) could be tested.

Exchange Rates:
The current interbank midrate is: AUDEUR 0.6323 EURAUD 1.5815
The interbank range this week has been: AUDEUR 0.6266- 0.6347 EURAUD 1.5754- 1.5957

More AUD/EUR updates.

More AUD/CAD updates.