FX News

The Australian Dollar (AUD) reversed off 0.6680 (1.4970) the July 2022 low midweek pushing back to 0.6765 (1.4780) in morning trading as risk improved. Putin spooked Euro buyers by announcing he was mobilising more troops into Ukraine. Consumer confidence in the eurozone is at the lowest on record falling 28 points below the 2020 level. Also on the wires was ECB Guindos which hasn’t helped by delivering a fairly downbeat view of things to come. Lagarde said more hikes are necessary to tackle inflation – this will be “the fastest change in rates in our history”. We have French and German Manufacturing data releasing tonight which isn’t expected to be pretty. We may see the Aussie edge higher and retest 0.6790 (1.4730) prior to the close.

The current interbank midrate is: AUDEUR 0.6755 EURAUD 1.4803
The interbank range this week has been: AUDEUR 0.6684- 0.6777 EURAUD 1.4754- 1.4960

The Bank of England (BoE) is the latest central bank to hike their interest rate, this morning’s 50 point move to 2.25% marked the 7th consecutive rise. This is the highest cash rate in 14 years, however the hike was seen as less aggressive than some were predicting. Of note 3 BoE members voted for a 75-point hike and 1 for only 25 points so voting was split. Meeting their 2.0% inflation target in a way which will sustain growth and employment is key. The British Pound (GBP) weakened post release to 1.6940 (0.5905) agst the Australian Dollar (AUD) but not outside recent range bound action. The energy crisis and concerning UK economic data may lead to further downside moves in the GBP.

The current interbank midrate is: AUDGBP 0.5901 GBPAUD 1.6946
The interbank range this week has been: AUDGBP 0.5846- 0.5914 GBPAUD 1.6907- 1.7105

It’s not looking too pleasant out there for US Dollar (USD) buyers with the Australian Dollar (AUD) depreciating another week clocking 0.6570 on its way to a fresh May 2020 low. The Federal Reserve hiked its cash rate by 75 points to 3.25% for the second time running as they continue with an aggressive tightening cycle to try and curb rising inflation. Fed chair Powell saying there will be more economic pain before inflation is back on target with a likely recession over the next 12 months. We expect a further hike of 75 points at their November meeting and another 50 points in December. Bottom line- as long as the Fed keeps raising rates and creating more uncertainty and a “flight to safety” risk outlook over the next few months, we could see more downside moves eventuate in the pair.

The current interbank midrate is: AUDUSD 0.6647
The interbank range this week has been: AUDUSD 0.6573- 0.6747

The New Zealand Dollar (NZD) fought back off the Feb 2022 low of 0.5900 (1.6950) midweek to enter Friday at 0.5945 (1.6820) improving off the back of a slight improvement in risk conditions. News that the Russian President Putin was announcing further mobilisation of forces into Ukraine hasn’t been overly detrimental to the NZD/EUR cross however the EUR was down against other crosses, especially the greenback. ECB’s Guindos also hasn’t helped the EUR after delivering a negative economic judgement of things to come. Huge support seen on the chart at 0.5775 (1.7320) this area should hold for a while.

The current interbank midrate is: NZDEUR 0.5942 EURNZD 1.6829
The interbank range this week has been: NZDEUR 0.5897- 0.5992 EURNZD 1.6688- 1.6955

The New Zealand Dollar (NZD) has underperformed over the week agst the British Pound (GBP) drifting to 0.5160 (1.9380) early this morning before getting a boost from the Bank of England Cash rate announcement, with prices trading back towards 0.5200 (1.9240) mid-morning. The Bank of England (BoE) hiked their interest rate this morning 50 points to 2.25% marking the 7th consecutive rise. This is now the highest rate since 2008, however the hike was seen as less aggressive than some were predicting with only 3 BoE members voting for a 75-point hike and 1 for 25 points, so voting was not conclusive. The Bank has also agreed to start reducing the stock of UK Govt Bonds held in Asset Purchase Facility financed by the issuance of central bank reserves. This equates to over 80 billion over the next 12 months. Ongoing energy woes and incoming concerning UK economic data may lead to further upside moves in the kiwi, we certainly don’t believe the 0.5130 (1.9500) zone will be broken any time soon.

The current interbank midrate is: NZDGBP 0.5190 GBPNZD 1.9267
The interbank range this week has been: NZDGBP 0.5158- 0.5255 GBPNZD 1.9026- 1.9384

The New Zealand Dollar (NZD) has posted a new low Thursday reaching 0.5800 against the preferred “safe haven” US Dollar (USD) as things start to get ugly. The Federal Reserve raised their cash rate 75 points to 3.25% yesterday sinking the kiwi further. To be fair the rot had well and truly set in by the announcement, investors perhaps realising a recovery of sorts is becoming less likely. Consumer sentiment in the US is not looking flash with numbers showing they are close to all-time lows. Meanwhile it was good to see a pick-up in equity markets overnight and small momentary reversal take place with prices back at 0.5880. Downward pressures remain in the cross with massive support at 0.5650 rapidly coming into view.

The current interbank midrate is: NZDUSD 0.5847
The interbank range this week has been: NZDUSD 0.5801- 0.5999

Snooze you lose. This week’s moves have been more of the same- with the Australian Dollar (AUD) euphoric agst the New Zealand Dollar (NZD), the cross posting 0.8800 (1.1360) as we mentioned earlier in the week, a possible retest of this level. Markets seem biased in their opinions that the Australian economy is holding up better, the indicators aren’t so warm to the idea, perhaps a little “risk mood” could be affecting investor views. Next week’s calendar is thin with just Orr speaking on Friday. I dare say more of the same could be in store over the coming week. Buyers of AUD should consider options.

The current interbank midrate is: NZDAUD 0.8794 AUDNZD 1.1361
The interbank range this week has been: NZDAUD 0.8795- 0.8937 AUDNZD 1.1189- 1.1369

The Australian Dollar (AUD) clocked another fresh low late last week of 0.6685 (1.4960) against the Euro (EUR) as risk conditions weren’t favourable, equity markets were flogged. The shift from 0.6980 (1.4330) levels cannot be ignored- this marks a proper reversal by the Euro over the last 4 weeks. The Euro is still in trouble given Russia’s invasion of Ukraine, ongoing energy woes and massive supply chain issues, but has the currency turned a corner, certainly the technical picture suggests this. This week’s Eurozone manufacturing data prints which is expected to show further deterioration in this sector.

Current Level: 0.6710 (1.4903)
Resistance: 0.6825 (1.5270)
Support: 0.6550 (1.4650)
Last Weeks Range: 0.6681-0.6816 (1.4671-1.4967)

The English Pound (GBP) continues to depreciate against the Australian Dollar (AUD) extending its run lower from last week’s 1.7220 (0.5810) to 1.6990 (0.5885) early today. A sluggish UK economy with detrimental economic data of late is giving the Aussie room to move. Last week’s UK Retail Sales was terrible coming in at -1.6% vs expectations of -0.5% confirming the economy is in trouble. This week’s key data comes in the form of the Bank of England official cash rate announcement with a 50-point shift higher to 2.25% predicted. We suggested last week a retest of 1.7000 (0.5880) which has eventuated, this week we predict the cross to reach key resistance at 1.6880 (0.5925).

Current Level: 0.5884 (1.6995)
Resistance: 0.5935 (1.7370)
Support: 0.5760 (1.6850)
Last Weeks Range: 0.5810-0.5917 (1.6899-1.7212)

The Australian Dollar (AUD) is bouncing around off the long-term lows around 0.6720 this morning against the US Dollar (USD) as it figures out market directional cues. Below 0.6660 and the cross is staring into the abyss of multi-year lows. Recent downside pressures in equity markets have spelt disaster for the AUD, the latest rhetoric from Governor Lowe isn’t helping the Aussie depreciating the currency. The Fed will most likely hike 75 points this week when they meet with chances of a 100 point move to 3.5% but as the cash rate is approaching its “normal” tightening policy settings we should see smaller moves ahead.

Current Level: 0.6732
Resistance: 0.6900
Support: 0.6650
Last Weeks Range: 0.6668-0.6914