FX News

Sideways action continued in the New Zealand Dollar (NZD), Australian Dollar (AUD) cross this week ranging between 0.9260 (1.0800) and 0.9365 (1.0680). Yesterday’s RBA cash rate release softened the Aussie after the central bank kept rates on hold at 3.60% the news shifting the pair from 0.9285 (1.0770) to 0.9345 (1.0700) over the following hours. On the chart we see massive long term resistance at 0.9400 (1.0640), the pair having posted moves in the 0.94’s this year. Today’s RBNZ cash rate announcement should give the kiwi more upside bias when they are widely predicted to hike to 5.00% from 4.75%. Post RBNZ update- The RBNZ has raised rates a surprise 50 points to 5.25% sending the cross to 0.9400 style levels. The RBNZ citing inflationary pressures as their main reason.

Current Level: 0.9384 (1.0650)
Resistance: 0.9390 (1.0800)
Support: 0.9260 (1.0650)
Last Weeks Range: 0.9291-0.9372 (1.0670-1.0762)

The New Zealand Dollar (NZD) extended gains against the US Dollar (USD) Monday after initially falling to 0.6200 levels. The kiwi has been bid solid over the last 2 days to post a fresh high of 0.6320 this morning, a 7-week high. Equity markets have been buoyant since early March as well as rallying commodities offering upside momentum for the kiwi. US Manufacturing data printed poor this morning at 46.3 vs 47.5 forecast not helping the greenback. The RBNZ hiked rates just a few minutes ago to 5.25%- this was not expected, sending the NZD north to 0.6370 areas. The central bank says they are committed to lowering inflation back to a 1-3% band. Risky business rising rates hard on the brink of a recession. We said last week we expected the kiwi to retest 0.6400 levels, this is still our order of play and beyond.

Current Level: 0.6349
Resistance: 0.6500
Support: 0.6170
Last Weeks Range: 0.617-0.6296

Market Overview

Key Points:
• Ex President Trump pleads not guilty to 34 felony counts
• The RBA left interest rates unchanged yesterday as predicted to give the central bank more time to read the state of the economy.
• US manufacturing orders dropped to its lowest level since May 2020, the index falling from 47.7 to 46.3.
• Gold has jumped over 20% since the low of October 2022, climbing to 2020 per ounce this morning the highest level since March 2022
• ECB’s Makhlouf says monetary policy will need to be kept at a restrictive level to dampen demand. The ECB is pricing in a 50 point hike to 3.5% at the May 5th release.
• Bank of Tokyo’s Tenreyro still believes the BoJ needs to hike rates in order to meet inflation targets.
• Russia’s foreign minister Lavrov says the “west” is trying to drive a wedge between Russia and Chinese political relationships.
• The British Pound (GBP) was the strongest currency in March with the Australian Dollar (AUD) and the US Dollar (USD the worst performers. Read more

Sunday April 2nd
2:00am NZD Daylight Saving Time Shift
4:00am AUD Daylight Saving Time Shift

Monday April 3rd
All Day CNY Bank Holiday

Tuesday April 4th
2:00am USD ISM Manufacturing PMI
Forecast 47.5
Previous 47.7
Tentative CNY Bank Holiday
4:30pm AUD Cash Rate
Forecast 3.85%
Previous 3.60%
4:30pm AUD RBA Rate Statement Read more

The British Pound (GBP) pushed higher over the week against the Australian Dollar (AUD) to reach a fresh high of 1.8510 (0.5400) a 13-month high Friday. All recent data has been positive for the GBP from mid last week when CPI came in higher at 10.4% y/y after 9.9% was predicted. BoE’s Bailey has been on the wires warning inflation is way too high still but reassuring the public that the UK’s banking sector remains resilient. Following the surprise inflation read the central bank raised interest rates to 4.25% from 4.00% as widely predicted with expectations that they will need to continue with hiking. It’s a quiet few days ahead on the economic docket with just BoE’s Bailey speaking mid next week. Peeking at the charts we see momentum firmly with the GBP- this should continue for at least the next few days with support at 0.5230 (1.9120)

The current interbank midrate is: AUDGBP 0.5414 GBPAUD 1.8470
The interbank range this week has been: AUDGBP 0.5403- 0.5449 GBPAUD 1.8349- 1.8508

The Australian Dollar improved Monday coming off 0.6630 levels against the US Dollar (USD) reaching 0.6720 into Friday as risk flows corrected. Last week the Fed raised its cash rate to 5.0% from 4.75% as predicted but notably confirmed they would keep their tightening policy in place for at least one more hike. Although y/y CPI came off 6.4% to 6.0% recently, the Fed still feels the need to keep with the current pace. Despite weaker Aussie Retail Sales and CPI- 6.8% vs 7.2% y/y printing the RBA should still look to hike at their next meeting. The AUD may struggles to push past 0.6800 on the upside over the coming days.

The current interbank midrate is: AUDUSD 0.6709
The interbank range this week has been: AUDUSD 0.6632- 0.6717

The English Pound (GBP) extended its run higher against the New Zealand Dollar (NZD) this week reaching a fresh high of 1.9850 (0.5040) an October 2022 level. The Pound has had plenty of upside momentum of late due to factors around Bank of England Baily warning inflation is still too high and they will benefit from strict regulation along with the central bank increasing interest rates to 4.25% from 4.0% last week. UK Retail Sales also boosted market mood with the number publishing a healthy 1.2% in February boosted by second hand good purchases. Due to inflationary pressures remaining we expect the bank of England to continue with its tightening policy and hike further, this should keep the cross heading lower for a while.

The current interbank midrate is: NZDGBP 0.5054 GBPNZD 1.9786
The interbank range this week has been: NZDGBP 0.5037- 0.5085 GBPNZD 1.9665- 1.9853

Higher lows followed by higher highs over the past 3 weeks in the New Zealand (NZD), US Dollar (USD) cross saw the kiwi reverse early in the week from 0.6180 to 0.6260 this morning, targeting last week’s high at 0.6295. Risk flows improved as the greenback was sold even after US consumer confidence improved in March. US Final GDP was downgraded overnight at 2.6% from 2.7% for the last quarter 2022 suggesting the US economy remains buoyant. However, the long-range picture suggests the economy is losing momentum if we look back at 2021 figures with growth around 5.9%. Next week’s RBNZ cash rate announcement should offer the normal currency moves, with the central bank looking at hiking further into low 5.0’s and possibly signalling further hikes on the horizon in order to bring down inflation to the target 2% range. We could see the kiwi spike and spike hard and test the early 2023 level at 0.6400 if the mood is dovish.

The current interbank midrate is: NZDUSD 0.6261
The interbank range this week has been: NZDUSD 0.6179- 0.6264

The New Zealand Dollar (NZD), Australian Dollar (AUD) cross continued to bang around in recent ranges this week with a tinge of upside bias with the kiwi. The low being 0.9295 (1.0760) and the high 0.9350 (1.0695) suggests the pair is positioning for directional cues. Aussie CPI y/y came off 7.2% to 6.8% disappointing analysts, adding to the poor mood was a weaker Retail Sales release. Next week’s RBNZ cash rate hike to 5.0%, possibly 5.25% from 4.75% hopefully will give us clues as to where the central bank sees their interest rate cap based on inflation forecasting. We still see upside possible in the kiwi especially if the RBNZ gives a message that they still have work to do to bring down inflation to their 2.0% target.

The current interbank midrate is: NZDAUD 0.9329 AUDNZD 1.0710
The interbank range this week has been: NZDAUD 0.9292- 0.9351 AUDNZD 1.0693- 1.0761

Key Points:

• NZ inflation expectations rise from 5.2% to 5.4% the highest read in 9 months.
• Ex US president Donald Trump has been indicted by a grand jury citing 4 people had knowledge of his porn star payment. He will be the first president, current or former to face criminal charges.
• A climate report has issued a warning that over 40,000 NZ flood prone coastal and non-coastal homes are at risk of losing insurance over the next 2-3 decades. 
• Cracks are starting to appear in the stability of European banks with the ECB “tapping” into the Fed’s credit swap lines to the tune of 487 million
• German prelim CPI y/y 7.4% vs 7.3% expected.
• The Australian Council of Trade Unions has called for a 7% rise in the minimum wage at the June meeting.
• NZ March consumer confidence falls to 77.7 from 79.8 in February.
• The Euro (EUR) has been the strongest currency in March with the US Dollar (USD) underperforming, the worst performer.