FX News

Tuesday March 7
4:30pm AUD Ivey PMI
Forecast: 55.9
Previous: 60.1
AUD Cash Rate
Forecast: 3.60%
Previous: 3.35%

Wednesday March 8
4:00am USD RBA Rate Statement
10:55am AUD Fed Chair Powell Testifies
11:00pm EUR RBA Gov Lowe Speaks

Thursday March 9
2:15am USD ECB President Lagarde Speaks
4:00am CAD ADP Non-Farm Employment Change
Forecast: 195K
Previous: 106K
CAD BOC Rate Statement
USD Overnight Rate
Forecast: 4.50%
Previous: 4.50%
USD Fed Chair Powell Testifies
7:01am USD JOLTS Job Openings
Forecast: 10.61M
Previous: 11.01M Read more

All eyes are on key Australian inflation data releasing tomorrow with forecasts for CPI y/y to tick higher in January possibly into the 8’s. This comes in contrast to recent forecasts predicting the figure to have peaked in December 2022. Inflation expectations however are predicted to drop in 2023 to around 5.3 from December’s 6.5% – we shall see. Contrasting to Eurozone predictions from ECB’s Nagel who is suggesting March inflation will likely be smaller than expected. A look at the long-term area around 0.6320 (1.5820) is not far away.

Current Level: 0.6348 (1.5752)
Resistance: 0.6515 (1.5900)
Support: 0.6290 (1.5350)
Last Weeks Range: 0.6372-0.6480 (1.5432-1.5693)

British Pound (GBP) strength has overwhelmed the Australian Dollar (AUD) in recent weeks, coming off the early Feb’s 1.7250 (0.5800) to today’s 1.7900 (0.5585). It’s been all about recent data risk supporting the GBP. A retest of January’s 0.5570 (1.7960) is the next target then 0.5475 (1.8270) the February 2022 low. Aussie CPI January is the key release this week with predictions of 7.9-8.0% a rise from the current 7.8% y/y which in turn send the AUD currency higher reversing recent moves.

Current Level: 0.5585 (1.7905)
Resistance: 0.5675 (1.8000)
Support: 0.5555 (1.7620)
Last Weeks Range: 0.5623-0.5751 (1.7386-1.7781)

The Australian Dollar (AUD) fell to 0.6695 off the weekly open against the US Dollar (USD) continuing last week’s declines to an 8-week low. Long term support on the chart is 0.6650, this should hold, this morning recovering to 0.6740 with punters also leaning off the 100-day moving average at 0.6720. This week the RBA will be concerned over rising inflation tomorrow. Expect a healthy push higher if the figure comes in above 7.8%

Current Level: 0.6736
Resistance: 0.6860
Support: 0.6600
Last Weeks Range: 0.6718-0.6918

Eurozone Manufacturing data was mixed, and German economic sentiment came in above forecast, meanwhile the RBNZ raised rates 50 points in a dovish read. This has set the tone of late- the New Zealand Dollar (NZD) retreating lower to 0.5820 (1.7180), the yearly open was circa 0.5960 (1.6780) highlighting Euro momentum in 2023. The Fibonacci chart pattern suggests we could see a reversal back towards support at 1.7060 (0.5860), the 61.8% fib level based on recent higher lows followed by lower lows.

Current Level: 0.5814 (1.7199)
Resistance: 0.5855 (1.7500)
Support: 0.5715 (1.7080)
Last Weeks Range: 0.5823-0.5890 (1.6980-1.7173)

NZ Retail Sales published soft Monday dragging down the New Zealand Dollar (NZD) from 0.5165 (1.9360) to this morning’s 0.5115 (1.9550) extending last week’s run lower against the British Pound. This move compounds on 4 weeks of poor performance by the kiwi in the face of a range of GBP supportive news. Climbing through 1.9350 (0.5170) the break above here corresponds with a move above the 100-day MA and could signal further upside.

Current Level: 0.5113 (1.9557)
Resistance: 0.5215 (1.9970)
Support: 0.5007 (1.9170)
Last Weeks Range: 0.5122-0.5204 (1.9215-1.9523)

Discouraging NZ Retail Sales sent the New Zealand lower Monday against the Australian Dollar (AUD) reversing earlier moves from last week’s 0.9185 (1.0885) to 0.9150 (1.0930). RBNZ’s Conway said the cash rate was expected to peak at 5.5% mid this year if spending is reigned in and consumption slows. We are yet to see a shift to the long-range bull trend, a fall through 0.9230 (1.0830) would certainly signal a momentum change. Price is forecast to retreat to 0.9025 (1.1080) especially if the iron ore price rally continues.

Current Level: 0.9151 (1.0921)
Resistance: 0.9190 (1.1020)
Support: 0.9075 (1.0880)
Last Weeks Range: 0.9019-0.9173 (1.0901-1.1087)

The New Zealand Dollar (NZD) continues to track lower against the US Dollar (USD) reaching a 13-week low overnight of 0.6128 before bouncing to 0.6170 over the past couple of hours of trading. Pressures remain to the downside for the kiwi, but we are expecting a “recovery” rally of sorts. In line with this is the 100-day MA which could give the kiwi a lift in the short term. A break above 0.6300 would take out most of the downside risks.

Current Level: 0.6167
Resistance: 0.6350
Support: 0.6130
Last Weeks Range: 0.6161-0.6260

Market Overview

Central Bank action and Inflation continues to dominate market moves this year with the Ukraine War raging on in the background hitting currencies hard.

The New Zealand Dollar (NZD) has earned the spot of the second to worst performer in 2023 so far ahead of the Japanese Yen (JPY), whereas the US Dollar (USD) has been the strongest performer.

As predicted the RBNZ raised their interest rate 50 basis points from 4.25% to 4.75% recently but defied expectations of a signal for a lower peak. In line with recent weather events there’s still room to move higher than the 5.5% initial top with policy guidance still required at the current pace. At 5.5% this would make it one of the highest interest rates in the developed world. With cyclone Gabrielle destroying large parts of New Zealand’s North Island the battle with inflation just got tougher for the RBNZ with several billions said to be needed to rebuild infrastructure and homes. Inflation currently stands at 7.2% for the fourth quarter of 2022 way to high. Read more

Sunday Feb 26
Day 4 All G20 Meetings

Monday Feb 27
10:45am NZD Retail Sales q/q
Forecast: 0.20%
Previous: 0.40%
10:00pm GBP MPC Member Broadbent Speaks

Tuesday Feb 28
2:30am USD Core Durable Goods Orders m/m
Forecast: 0.10%
Previous: -0.20%
2:30am USD Durable Goods Orders m/m
Forecast: -3.70%
Previous: 5.60%
4:00am USD Pending Home Sales m/m
Forecast: 0.90%
Previous: 2.50%
5:10pm JPY BOJ Gov-Designate Ueda Speaks Read more