FX News

Tuesday April 18
12:30am USD Empire State Manufacturing Index
Forecast: -17.7
Previous: -24.6
3:00am EUR ECB President Lagarde Speaks
1:30pm AUD Monetary Policy Meeting Minutes
2:00pm CNY GDP q/y
Forecast: 3.90%
Previous: 2.90%
6:00pm GBP Claimant Count Change
Forecast: 10.2K
Previous: -11.2K
6:00pm GBP Average Earnings Index 3m/y
Forecast: 5.10%
Previous: 5.70%
9:00pm EUR German ZEW Economic Sentiment
Forecast: 15.5
Previous: 13 Read more

The Australian Dollar (AUD) came off 1.0610 (0.9425) late last week to rally back to 1.0775 (0.9280) this morning. Weirdly upside moves in the New Zealand Dollar (NZD) post a 50-point hike by the RBNZ came to a screaming Halt. Investors preferring to buy the AUD with commodities and precious metal prices strengthening. Adding to the confusion has been talk by the RBA suggesting decent odds of a cut to rates by the end of the year. Australian jobs numbers print later today with all eyes on the data and how this may affect the RBA’s recent mood to pause tightening plans. Of note Australian consumer confidence reached its highest level since June 2022 and China and Australia have reached a deal which will possibly see tariffs removed on exports of barley implemented in 2020. On the chart we see price pushing above the 100-day moving average line suggesting further upside for the AUD may continue.

The current interbank midrate is: NZDAUD 0.9278 AUDNZD 1.0771
The interbank range this week has been: NZDAUD 0.9259- 0.9407 AUDNZD 1.0630- 1.0800

Bank of England’s Bailey was on the wires early this morning talking about UK banking stability saying he doesn’t see a repeat of the 2008 financial crisis. Balance sheets will remain larger than pre-crisis for financial stability reasons, he went on to suggest. The Pound (GBP) pushed higher off 0.5020 (1.9930) post his speech climbing to 0.4995 (2.0010) an October 2022 level. Markets await UK GDP m/m out tonight for February predicted to come in at 0.1%. The cross looks to be targeting 0.4965 (2.0135) the early 2022 low. Through here and we are deep into long term ranges.

The current interbank midrate is: NZDGBP 0.4970 GBPNZD 2.0120
The interbank range this week has been: NZDGBP 0.4970- 0.5044 GBPNZD 1.9825- 2.012

The English Pound (GBP) extended gains over the Australian Dollar (AUD) this week reaching 1.8660 (0.5359) in early morning trading. The 9th from the last 10 weeks the GBP has outperformed the Aussie. Bank of England’s Bailey confirmed last night that the UK banking sector was sound, saying he doesn’t see another 2008 financial crisis eventuating based on bank reforms enacted post the 2008 crisis, being well capitalised has been a big part of this. UK monthly GDP prints tonight and is expected to post around 0.1% for the month of February. We may see further upside in the GBP develop into the weekly close. Massive support at 0.5220 (1.9150) on the chart, below here and we are hitting multi year lows.

The current interbank midrate is: AUDGBP 0.5357 GBPAUD 1.8667
The interbank range this week has been: AUDGBP 0.5347- 0.5395 GBPAUD 1.8535- 1.8700

The Australian Dollar (AUD) shot up early this morning post the Fed inflation read, posting 0.6720 against the US Dollar (USD) despite US equity markets falling. US inflation for March came in at 0.1%, moving the y/y figure from 5.1% to 5.0% meeting expectations. Fed minutes from the last meeting in late March released overnight highlighting just how unstable and uncertain markets are. Recent turmoil in the recent bank closures have increased the chances of the Fed continuing with their tightening policy. The Fed will closely monitor data action ahead of the May 3rd meeting. At the moment we expect a 25-point hike. With Aussie unemployment data and later US Retail Sales to print we may see price shifts into the weekly close. Overall, the Aussie remains heavy.

The current interbank midrate is: AUDUSD 0.6691
The interbank range this week has been: AUDUSD 0.6618- 0.6722

US Inflation cooled to its lowest level in two years in March to 5.0% y/y sending stocks lower and the kiwi unexpectedly higher to 0.6240. Inflation remains far higher than the Fed would care to admit targeting 2.0% leaving us to speculate as to whether the central bank will raise rates at the May 3rd meeting. We suspect so by 25 points which should give the greenback some fundamental upside over the remainder of April trading. Expectations are for the Fed to have started aggressively cutting rates by the end of the year. Lower US yields should push equity markets higher and therefore the NZD should go along for the ride. Downside bias in the kiwi may gather momentum in the long run.

The current interbank midrate is: NZDUSD 0.6207
The interbank range this week has been: NZDUSD 0.6180- 0.6251

Key Points:

• The International Monetary Fund sees growth at 2.8% in 2023 and 3.0% for 2024, this is down slightly on January’s forecast. Global growth is seen at 3.0% in 2028, this is the worst mid-term forecast since 1990.
• North Korea have launched another ballistic missile towards the Sea of Japan 
• Post US CPI release Goldman Sachs doesn’t expect a hike in May but nothing at the June meeting, previously they had forecast rises at both meetings.
• ECB’s Villeroy says they have a long way to go hiking rates with a 50-point hike in May forecast. 
• Bank of Canada holds their cash rate at 4.50% as widely expected.
• Fed warns of recession chances last in 2023.
• Ukraine has launched an investigation over a gruesome video showing a  Ukraine soldier being beheaded. 
• The Euro (EUR) has been the strongest currency in April thus far with the New Zealand Dollar (NZD) the weakest.

Monday Apr 10
All Day NZD Bank Holiday
All Day AUD 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

Wednesday Apr 12
10:00am USD FOMC Member Harker Speaks Read more

The Australian Dollar (AUD) dropped to its lowest level in 20 months this morning against the Euro (EUR) as the RBA held interest rates unchanged yesterday. The Australian central bank decided it was time to pause hiking to assess the economic outlook amid considerable uncertainty. This is to say they have not ruled out more rises if required. RBA’s Lowe said they remain resolute in their determination to bring down inflation to their target band. Also of note is the opinion of the RBA that inflation may have peaked. We won’t know until Q1 is published at the end of this month. With Easter break looming it should be a slow finish to the week. Downside pressures remain for the AUD.

Current Level: 0.6165 (1.6220)
Resistance: 0.6290 (1.6400)
Support: 0.6100 (1.5900)
Last Weeks Range: 0.6130-0.6195 (1.6142-1.6312)

The RBA paused its hiking run yesterday leaving the cash rate at 3.6%. This is the first time in 11 meetings going back to May last year the RBA have held policy steady. The decision was mostly “priced in” although we did see prices in the Australian Dollar (AUD), British Pound (GBP) fall lower to 0.5390 (1.8560) from 0.5455 (1.8330) levels post the release. A Feb 2022 low. Leading into Easter holidays there is not a lot on the calendar to come, we see more of the same and the AUD to stay under pressure.

Current Level: 0.5405 (1.8501)
Resistance: 0.5490 (1.9100)
Support: 0.5235 (1.8220)
Last Weeks Range: 0.5394-0.5449 (1.8351-1.8537)