FX News

The Banking crises continues to upset market stability and risk appetite. The US and European authorities have managed to contain the crises so far, but time will reveal all. The NZD has been sliding against the USD, since the initial boost from the RBNZ’s aggressive 50 basis point rate rise in early April. It has been all downhill since, despite the favourable interest rate differentials. Look for guides in the RBNZ Financial Stability Report to be released Wednesday 3rd May.

Current Level: 0.6175
Resistance: 0.6200
Support: 0.6125

Monday May 1
All Day CNY Bank Holiday
All Day GBP Bank Holiday
All Day EUR French Bank Holiday
All Day EUR German Bank Holiday
All Day EUR Italian Bank Holiday

Tuesday May 2
2:00am USD ISM Manufacturing PMI
Forecast: 46.8
Previous: 46.3
4:30pm AUD Cash Rate
Forecast: 3.60%
Previous: 3.60%
4:30pm AUD RBA Rate Statement
11:20pm AUD RBA Gov Lowe Speaks

Wednesday May 3
2:00am USD JOLTS Job Openings
Forecast: 9.74M
Previous: 9.93M
10:45am NZD Employment Change q/q
Forecast: 0.40%
Previous: 0.20%
10:45am NZD Unemployment Rate
Forecast: 3.50%
Previous: 3.40%
All Day JPY Bank Holiday Read more

Key Points:

Risk off currency flows continue into Thursday.
The US Consumer Confidence Index falls from 104 to 101 compared to consensus of 104 as economic expectations dropped.
New Zealand Credit Card spending eased from 25.5% y/y to 20.3% in the month of March.
Australian Inflation falls from 7.8% year on year to 7.0% in the first quarter of 2023.
US GDP first quarter is now forecast to come in at -1.1%
German consumer confidence improved from -29.3 to -25.7 on better income expectations in April.
Singapore has doubled the stamp duty on foreign buyers buying real estate to cool the market.
The ECB’s Herodotou has said the high ECB bank rates are beginning to impact the economy.
The Euro (EUR) has been the strongest performer this week with the Australian Dollar (AUD) underperforming and the weakest of the main board.

The heavy risk off mood this week in markets attributed by discouraging Fed comments and upward pressure to inflation expectations has seen the US Dollar (USD), Australian Dollar (AUD) cross slide to 0.6600 levels. Australian consumer confidence remains poor with no real recovery in sight from the looming recession. Confidence printed below 80.0 which was below the number for the entire period between 2020 to 2022 showing ongoing strains with inflation and monetary policy. Yesterday’s CPI Australian printed at 1.4% for the 1st quarter of 2023 up slightly from 1.3% in Dec 2022 but year on year down from 7.8% to 7.0% putting to bed any looming forecasting of further RBA rate hikes. The news sent to Aussie lower, mixed in with dips in metal pricing and a sharp selloff in the Chinese Yuan. Next week’s RBA cash rate, Fed cash rate and Non-Farm Payroll releases should give us plenty of scope for decent moves.

The current interbank midrate is: AUDUSD 0.6603
The interbank range this week has been: AUDUSD 0.6590- 0.6705

Risk flows this week has been British Pound (GBP) supported, against the Australian Dollar (AUD) where we have seen fresh 2023 lows around 0.5300 (1.8870) develop. Australian CPI for the first quarter of 2023 printed around expectations of 1.3% to 1.4% dropping the year-on-year figure from 7.8% to 7.0%. The RBA held interest rates at 3.6% in April and March with speculation that if the inflation read came in hot they were likely to hike further in the coming months. This clearly hasn’t been the case as argument for further hikes has surely been put to bed. Next week’s RBA cash rate and statement should be a non-event. A daily close below 0.5220 (1.9150) will see the pair post March 2020 lows and the continuation of the long-term bear theme.

The current interbank midrate is: AUDGBP 0.5295 GBPAUD 1.8857
The interbank range this week has been: AUDGBP 0.5283- 0.5398 GBPAUD 1.8523- 1.8928

Risk off currency mood of late has seen the English Pound (GBP) extend moves against the New Zealand Dollar (NZD) into Thursday trading, the pair posting a fresh low of 2.0390 (0.4905) the February 2022 low. The Bank of England’s Pill was on the wires saying British people need to accept they are poorer rather than trying to claw back living standards, went down like a cup of cold sick weakening the GBP for a while. With very little data published this week the main driver has been risk; next week’s NZ unemployment rate is our focus looking forward. A break below 0.4870 (2.0530) will send us into 3-year low areas on the big picture downtrend.

The current interbank midrate is: NZDGBP 0.4905 GBPNZD 2.0387
The interbank range this week has been: NZDGBP 0.4903- 0.4964 GBPNZD 2.0144- 2.0392

The recent stall in the run up to 0.6500 is well behind us now with most of the action of late all about US Dollar (USD) strength and “risk” of market sentiment taking down the New Zealand Dollar (NZD). Recent US data in the form of New Home Sales and Core Goods Orders both printed above expectations helped to squeeze the kiwi lower to 0.6120 this morning. Last week’s NZ inflation data came in soft, repricing dovish RBNZ expectations which should keep the kiwi on a downward trajectory. Key support sits at 0.6050 and 0.6000, below here and the cross could carve out a broader long-term bear run.

The current interbank midrate is: NZDUSD 0.6119
The interbank range this week has been: NZDUSD 0.6110- 0.6186

The New Zealand Dollar (NZD) regained the edge Monday after dropping to 0.9150 (1.0930) Friday against the Australian Dollar (AUD) pushing back to 0.9295 (1.0760) in early morning trading. Australian inflation looks to have peaked in late 2022 with yesterday’s data showing the souring rate of living costs could now be correcting lower. CPI first quarter 2023 came in at 7.0% down from 7.8% from a year ago. The RBA will no doubt be content to leave rates on hold at next week’s meeting. That being said, the consumer confidence index ticked below 80.0 the lowest level since late 2019 highlighting ongoing concerns. With the RBNZ predicted to raise rates to 5.5% again in May following the 50 point hike on April 5th we could see currency/central bank divergence kick in again and a stronger NZD. The 50% retracement Fibonacci resistance at 0.9295 (1.0760) has been hit with upside bias in the AUD over the last couple of hours.

The current interbank midrate is: NZDAUD 0.9263 AUDNZD 1.0791
The interbank range this week has been: NZDAUD 1.0758- 1.0906 AUDNZD 0.9169- 0.9295

Tuesday April 25th
All Day NZD Bank Holiday
All Day AUD Bank Holiday
All Day EUR Italian Bank Holiday

Wednesday April 26th
2:00am USD CB Consumer Confidence
Forecast: 104.1
Previous: 104.2
1:30pm AUD CPI q/q
Forecast: 1.30%
Previous: 1.90%
1:30pm AUD CPI y/y
Forecast: 6.60%
Previous: 6.80%
1:30pm AUD Trimmed Mean CPI q/q
Forecast: 1.40%
Previous: 1.70% Read more

The Australian Dollar (AUD) has recovered losses post last week’s CPI slide to 0.6700 picking up bids this week on its way to 0.6760 early this morning. The US Dollar index slipping under 102.0 from 106.0 supported originally by a hawkish Fed – however the run has been unsustainable. Interest rate differentials remain bullish for the greenback with a further hike expected at the 4th May meeting. There are signs that demand for labour is cooling, and inflation is expected to come down to around 3.5% by year end. US Manufacturing prints tonight amid several Fed members speaking. Looking ahead we have Aussie CPI Wednesday, next week’s economic highlight. We may see a retest of 0.6780 prior to the weekly close as the AUD is squeezed.

The current interbank midrate is: AUDUSD 0.6739
The interbank range this week has been: AUDUSD 0.6680- 0.6770