FX News

Upside moves in the Australian Dollar (AUD) to 0.6795 against the US Dollar (USD) have been replaced by risk off, the AUD falling back to 0.6595 Tuesday morning. The safe-haven USD has come into play again after covid stricken China is again reporting its first deaths in over 6 months creating worry. Focus this week will remain on the Feb outlook with a slew of Fed members speaking amid expected volatility as the US breaks for Thanksgiving holidays. Overall risks in the cross remain to the downside with the recent rally stalling and the chances of an extension of the recent long-term decline.

Current Level: 0.6606
Resistance: 0.6700
Support: 0.6520
Last Weeks Range: 0.6632-0.6797

The Euro (EUR) was under pressure in early week action extending losses from last week through to 0.6010 (1.6635) in early Tuesday before the New Zealand Dollar (NZD) gave back gains to 0.5950 (1.6800) as I write. Risk off moves dominate this morning as equities are down around 1%. Eurozone recession worries have again been in the spotlight with Lagarde saying general risks have increased. On the economic docket this week is the RBNZ rate statement and cash rate release. It’s widely expected the central bank will continue with its aggressive tightening campaign and hike 75 points to 4.25% on its way to 5.0% data dependant. The kiwi may target 0.6000 (1.6660) this week.

Current Level: 0.5949 (1.6809)
Resistance: 0.6015 (1.7100)
Support: 0.5850 (1.6630)
Last Weeks Range: 0.5877-0.5977 (1.6729-1.7013)

UK Inflation hit a new high of 11.1% the biggest number in 41 years for the month of October as food, energy and transport costs balloon out. The New Zealand Dollar (NZD), British Pound (GBP) traded lower post release to 0.5155 (1.94) levels, overall, over the week’s action was mostly sideways. UK’s Finance Minister Jeremy Hunt delivered his tax and spending budget Thursday unveiling a 5.5B fiscal plan as he sought to restore some credibility in the new PM Sunak’s govt. Millions of people will be paying higher taxes and higher energy costs. The wash up is that estimates are now for the UK economy to dive into recession early 2023 as growth is predicted to contract by 1.4%. With the RBNZ expected to hike interest rates 75 points to 4.25% this week downside movement should be limited.

Current Level: 0.5153 (1.9406)
Resistance: 0.5215 (1.9670)
Support: 0.5085 (1.9170)
Last Weeks Range: 0.5136-0.5211 (1.9188-1.9467)

Recent NZD momentum has dulled, and the New Zealand Dollar (NZD) is back trading in a risk off tone against the US Dollar (USD). Last week’s 0.6200 top has been replaced by downside bias to 0.6100 as markets go back to risk off and the buzz around softer US inflation data fades. With the world cup kicking off and the US Thanksgiving holiday in effect until the end of the week conditions should be a little thin with increased volatility. Looking ahead we have the RBNZ rate announcement and statement with predictions the central bank will hike a further 0.75% to 4.25%. The Fed’s Mester has been on the wires saying the Fed is nowhere near finished with hiking rates to achieve their magical 2.0% inflation target but may be in a position to slow down increases at the December meeting. Technically the uptrend remains in the cross.

Current Level: 0.6095
Resistance: 0.6440
Support: 0.5830
Last Weeks Range: 0.6051-0.6205

Market Overview:

Key Points:

• Further lockdown concerns in China are causing investors to buy the safe-haven USD Dollar this week
• Crude Oil trades at a 2-month low at 80.06
• Hong Kong’s leader John Lee has tested positive 1 day after meeting with Xi Jinping at a summit in Thailand
• Both Australia and New Zealand’s housing markets continue to tank, Australia’s medium house price fall 1.2% in October while NZ is -10.9% lower year on year.
• The IMF are predicting the global economy will get “gloomier” particularly in Europe next year with economic activity expected to contract while inflation remains extremely high
• The British Pound (GBP) was the strongest currency last week while the Australian Dollar (AUD) was the worst performer. Read more

Tuesday 22/11
8pm, AUD, RBA Gov Lowe Speaks

Wednesday 23/11
All Day, JPY, Bank Holiday
2pm, NZD, Official Cash Rate
Forecast: 4.25%
Previous: 3.50%
2pm, NZD, RBNZ Monetary Policy Statement
2pm, NZD, RBNZ Rate Statement
3pm, NZD, RBNZ Press Conference
9:15pm, EUR, French Flash Services PMI
Forecast: 50.6
Previous: 51.7
9:30pm, EUR, German Flash Manufacturing PMI
Forecast: 45.3
Previous: 45.1
9:30pm, EUR, German Flash Services PMI
Forecast: 46.4
Previous: 46.5
10:30pm, GBP, Flash Manufacturing PMI
Forecast: 45.7
Previous: 46.2
10:30pm, GBP, Flash Services PMI
Forecast: 48
Previous: 48.8 Read more

Sideways moves of late in the Euro (EUR), Australian Dollar (AUD) cross have dominated play with the pair camped out around the 0.6495 (1.5400) area for several days. The recent Hawkish tone from the ECB could limit upside moves for the Aussie this week especially if today’s EU economic sentiment report comes in favourable. Australian Employment data releases Thursday the weekly highlight with predictions the unemployment rate to remain at 3.5%. Chinese metal prices continue to rise after China opens up again post covid lockdowns, this may support the Aussie.

Current Level: 0.6486 (1.5417)
Resistance: 0.6520 (1.5670)
Support: 0.6390 (1.5340)
Last Weeks Range: 0.6391-0.6511 (1.5358-1.5647)

The Australian Dollar (AUD) extended its rise against the English Pound (GBP) Monday reaching 0.5730 (1.7460) early this morning as risk markets improved. The Pound has struggled to gain any momentum since the US CPI print Friday and recent UK recession fears. We have seen selling off the back of BoE Tenreyro’s comments after he said the central bank may need to cut rates next year. Key standouts this week are UK CPI y/y and later Australian employment figures. With inflation at 10.1% and expected to tick higher to 10.7% we may see buying in the GBP.

Current Level: 0.5692 (1.7568)
Resistance: 0.5585 (1.7800)
Support: 0.5620 (1.7900)
Last Weeks Range: 0.5614-0.5694 (1.7560-1.7812)

The Australian Dollar (AUD) rallied late Friday off the back off US CPI easing from 7.9% y/y to 7.7% y/y lower than forecast of 7.9% sending buyer interest back into crosses, the AUD reaching 0.6712 where it sits into Tuesday sessions, a 20 September high. We may be witnessing the formation of a long-term base in the cross and fundamentally a stronger AUD with a bullish tone developing. With key areas opening up in China post lockdown restrictions, industry is booming again and pushing up metal prices such as iron ore and coal, this could underpin further surges and demand in the AUD. Australian jobs data print Thursday, predicted to be solid.

Current Level: 0.6698
Resistance: 0.6900
Support: 0.6500
Last Weeks Range: 0.6383-0.6704

The Euro (EUR) closed the week around the 0.5910 (1.6930) region against the New Zealand Dollar (NZD) after being at 0.5850 (1.7100) levels midweek. Bias in the pair looks to be to the downside with Eurozone growth forecasts and the recently the hawkish ECB, this could limit upside shifts in the kiwi. The economic calendar is thin this week for the pair with just Eurozone Industrial Production and Lagarde speaking Thursday.

Current Level: 0.5900 (1.6949)
Resistance: 0.5990 (1.7130)
Support: 0.5840 (1.6700)
Last Weeks Range: 0.5845-0.5948 (1.6810-1.7107)