FX News

Monday July 24
7:15pm EUR French Flash Manufacturing PMI
Forecast 46.1
Previous 46
7:15pm EUR French Flash Services PMI
Forecast 48.5
Previous 48
7:30pm EUR German Flash Manufacturing PMI
Forecast 40.9
Previous 40.6
7:30pm EUR German Flash Services PMI
Forecast 53.2
Previous 54.1
8:30pm GBP Flash Manufacturing PMI
Forecast 46.1
Previous 46.5
8:30pm GBP Flash Services PMI
Forecast 53.1
Previous 53.7

Tuesday July 25
1:45am USD Flash Manufacturing PMI
Forecast 46.1
Previous 46.3
1:45am USD Flash Services PMI
Forecast 54
Previous 54.4

Wednesday July 26
2:00am USD CB Consumer Confidence
Forecast 112.1
Previous 109.7
1:30pm AUD CPI q/q
Forecast 1.00%
Previous 1.40%
1:30pm AUD CPI y/y
Forecast 5.50%
Previous 5.60%
1:30pm AUD Trimmed Mean CPI q/q
Forecast 1.10%
Previous 1.20%

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After posting 0.6890- key resistance, late last week against the US Dollar (USD), the Aussie extended falls to 0.6750 midweek as Chinese data failed to impress. The Chinese Yuan dropped after discouraging “FDI” data showing foreign investment into China slowed. Australian employment figures pushed up the AUD to 0.6850 area post the release, while the unemployment rate remained at a stubborn 3.5%, the participation rate only fell slightly from the May record to 66.8%. This should raise questions over an RBA raising rates at their next meeting. We expect the AUD to push up into the weekly close to retest 0.6800 levels. Next week’s economic docket full with the Federal Reserve monetary policy leading the way with the Fed resuming their rate hikes. We expect a rise from 5.25% to 5.5% and big dollar buying.

The current interbank midrate is: AUDUSD 0.6776
The interbank range this week has been: AUDUSD 0.6749- 0.6845

NZ CPI remains stubbornly high with the release Wednesday showing the June figure at 6.00% down from 6.7% vs 5.9% predicted. Fuel costs have eased while food prices, in particular vegetables, have gained over 23% in the last year. The RBNZ signalled they would be sitting on the 5.5% cash rate for some time, but this recent inflation data may test this. Meanwhile UK inflation dipped to 7.9% year on year in June compared to expectations of 8.2% making the read the biggest decline in two months and the lowest level since March 2022. The British Pound (GBP), New Zealand Dollar (NZD) cross remained in its 5-week range with the GBP recovering gains throughout this morning’s London session off 2.0490 (0.4880) back to 2.0655 (0.4840). UK Retail Sales prints tonight and should reflect the recent easing trend.

The current interbank midrate is: NZDGBP 0.4839 GBPNZD 2.0665
The interbank range this week has been: NZDGBP 0.4786- 0.4879 GBPNZD 2.0492- 2.0891

Price stalled out midweek around 0.6400 at key resistance in the New Zealand (NZD), US Dollar (USD) cross falling towards 0.6230 into late Thursday sessions. Soft equity markets took the kiwi down across the board, correcting back to a pivotal support area around 0.6220. New Zealand CPI published at 6.0% in June y/y after 5.9% was forecast, this is down from May’s 6.7% which is positive but not good enough according to pundits. Fuel prices have eased 15% over the year while offsetting vegetable prices up 23.3% had the biggest impact. The “on hold” RBNZ policy may be tested at the August 16th meeting. We suspect the pair may push towards 0.6300 prior to the weekly close.

The current interbank midrate is: NZDUSD 0.6231
The interbank range this week has been: NZDUSD 0.6212- 0.6368

The Australian Dollar (AUD) recovered off 1.0740 (0.9310) areas early week to take back losses against the New Zealand Dollar (NZD) with price reaching 1.0900 (0.9175) this morning. NZ CPI came in at 6.0% after 5.9% was predicted, down from May’s 6.7%, the lowest read since the last quarter of 2021. However the release only helped the kiwi momentarily with Aussie momentum restored post Australian Job’s data printing. The unemployment rate stayed unchanged at 3.5%- the lowest level in nearly 50 years. The participation rate has also been extremely good over the last few months at 66.8 in June, just 0.1% lower from the May peak. The chances of an RBA hike now at the next policy meeting on 1 August is around 20%. Next week’s Australian CPI y/y data will capture attention, anything north of 6.7% should guarantee further buying in the AUD.

The current interbank midrate is: NZDAUD 0.9194 AUDNZD 1.0873
The interbank range this week has been: NZDAUD 0.9175- 0.9326 AUDNZD 1.0722- 1.0899

Over the week the British Pound (GBP) has continued to give back gains against the Australian Dollar (AUD) extending last week’s run from 1.9380 (0.5160) to 1.8560 (0.5390) into early morning trade. UK inflation printed positive at 7.9% year on year in June compared to expectations of 8.2%, the largest decline in two months and the smallest level since March 2022. Aussie job’s numbers remain tight in June with the unemployment rate unmoved at 3.5%. The economy added 32,000 jobs to the workforce as the participation rate stayed at a record high 66.8%. The RBA may consider raising rates in August but would be dependent on incoming data. Certainly, the Aussie has been boosted on prospects of a higher cash rate.

The current interbank midrate is: AUDGBP 0.5263 GBPAUD 1.8996
The interbank range this week has been: AUDGBP 0.5189- 0.5305 GBPAUD 1.8848- 1.9269

The Australian Dollar (AUD), Euro (EUR) traded to pivotal levels this morning reaching 0.6130 (1.6320) representing heavy resistance with the cross threatening this zone on several occasions this year. A break below (0.6120 (1.6350) could signal further downside for the Aussie. Central bank policy divergence with the ECB still considering further rate hikes on the 28th of July and beyond with inflation expected to be high until 2025 should bring further buying in the EUR.

Current Level: 1.6488 (0.6065)
Resistance: 0.6300 (1.6740)
Support: 0.5975 (1.5870)
Last Weeks Range: 0.6052-0.6161 (1.6230-1.6522)

The British Pound (GBP) managed to clock another high against the Australian Dollar (AUD) mid last week of 0.5160 (1.9390) before dropping to around 0.5230 (1.9130) at the close of the week. This represents the lowest the pair has travelled since 3 May 2020. UK inflation is the key data to publish Wednesday and should reflect a softening theme. Certainly, this will give us clues how the BoE hike at their next meeting August 3rd. Aussie jobs numbers also publish Thursday with the unemployment rate expected to hold at 3.60%.

Current Level: 0.5213 (1.9182)
Resistance: 0.5410 (1.9340)
Support: 0.5170 (1.8485)
Last Weeks Range: 0.5157-0.5260 (1.9011-1.9390)

The Australian Dollar (AUD) underperformed Monday extending declines to 0.6790 against the US Dollar (USD) as risk markets suffered. Data reporting a weaker Chinese economic situation spooked markets overnight. Quarterly growth came in at 0.8% after a 2.2% release in Q1, also the y/y growth forecast was downgraded from 7.1% to 6.3%. Next week’s Fed decision could start to pressure the AUD as expectations increase for the Fed to hike again, core inflation is declining, however jobs data is still tight worrying the central bank. On the chart we see a “fib” setup with support at 0.6800 offering a floor of sorts.

Current Level: 0.6820
Resistance: 0.6890
Support: 0.6490
Last Weeks Range: 0.6622-0.6842

Risk sentiment took its toll on the New Zealand Dollar (NZD) off the weekly open dropping to 0.5630 (1.7770) against the Euro (EUR) as it continued downside moves. The technical bear channel which has been held since March 2022 looks well formed to keep the kiwi on the backfoot for a while yet. Especially when central bank policy supports further buying in the EUR based on more ECB tightening required. The EUR should stay well supported on dips and could retest the support area around 0.5400 (1.8500) over the coming weeks. NZ quarterly inflation Wednesday should tick lower.

Current Level: 0.5630 (1.7761)
Resistance: 0.5820 (1.8020)
Support: 0.5550 (1.7180)
Last Weeks Range: 0.5610-0.5713 (1.7502-1.7824)