FX News

Sunday 28/08
Day 3, All, Jackson Hole Symposium

Monday 29/08
All Day, GBP, Bank Holiday

Tuesday 30/08
6:15am, USD, FOMC Member Brainard Speaks
All Day, EUR, German Prelim CPI m/m
Forecast: 0.20%
Previous: 0.90%

Wednesday 31/08
2am, USD, CB Consumer Confidence
Forecast: 97.4
Previous: 95.7
2am, USD, JOLTS Job Openings
Forecast: 10.43M
Previous: 10.70M
3am, USD, FOMC Member Williams Speaks
9pm, EUR, CPI Flash Estimate y/y
Forecast: 9.00%
Previous: 8.90%
9pm, EUR, Core CPI Flash Estimate y/y
Forecast: 4.10%
Previous: 4.00% Read more

Key Points:

RBNZ’s Orr speaking this morning says there will be at least two more rate hikes by the central bank, Orr believes NZ won’t drop into a recession when the third quarter GDP results are published on the 15th of December
The US Government’s latest 3B tranche of military assistance for Ukraine will be welcomed, it includes AeroVironment’s Puma drones and ammunition from General Dynamics
The Jackson Hole symposium in Wyoming starts midweek with Powell speaking midday today on global economic outlook
NZ Retails figures for the June quarter were down 2.3% or a seasonally adjusted 26B
The Australian Dollar (AUD) is the strongest currency this week while the Euro (EUR) is the weakest on the main board of currencies
Bank of Japan’s member Nakamura said the central bank will continue its powerful easing because of the current high inflation and unsustainable energy prices
The Bank of England may look to ramp up its rate hikes over the coming months due to spiralling inflation expectations with recent figures suggesting we may see inflation pricing pass 15.0%
The Euro (EUR has fallen below parity against the US Dollar (USD) to a 0.9900 low earlier this week the first time this has happened since December 2002

The Euro (EUR) continues to depreciate at a great rate of knots against the New Zealand Dollar (NZD) and across the board with ongoing eurozone concerns. The pair traded to 0.6280 (1.5930) Wednesday before recovering slightly Friday to 0.6240 (1.6030). Poor eurozone PMI has markets considering the possibility this will underpin a likely recession. Of note German power prices have hit record highs as the nord stream pipe is set for maintenance from 31st August. German gas and power prices have surged as panic over Russian supplies are causing massive concerns. Meanwhile the ECB minutes confirmed a hike of 50 points is likely at the September meeting over the previously indicated 25 points. Traders seem happy to position for further falls in the cross with key event and geopolitical risk likely to support the NZD for a while longer.

The current interbank midrate is: NZDEUR 0.6235 EURNZD 1.6038
The interbank range this week has been: NZDEUR 0.6147- 0.6280 EURNZD 1.5922- 1.6266

The Australian Dollar (AUD) has been the strongest currency across the board this week, against the British Pound (GBP) it extended its hold reaching 0.5900 (1.6950) overnight a fresh November 2017 high. UK Manufacturing came in light at 46.0 agst 51.0 as demand in the sector has fallen away. A more hawkish leaning Bank of England (BoE) has been doing the rounds of late with predictions their interest rate could peak as high as 4.5% around mid-2023. The GBP is suffering stagnation risks of late. With equity markets closing the day positive we should see the Aussie push higher into the weekly close.

The current interbank midrate is: AUDGBP 0.5892 GBPAUD 1.6972
The interbank range this week has been: AUDGBP 0.5810- 0.5907 GBPAUD 1.6927- 1.7209

The poor Euro (EUR) “hasn’t had a look in” this week extending declines against the Australian Dollar (AUD) to 0.7000 (1.4290) in morning trading. The first time we have seen 0.70 the big figure in the pair since April 2017. We have a way to go before we see the 2013 high of 0.7360 but anything is possible with ongoing Eurozone inflation and energy price rises expected to continue. Poor eurozone PMI has analysts weighing in on the possibility this will underpin a likely recession. Meanwhile the ECB minutes confirmed a hike of 50 points is likely at the September meeting over the previously indicated 25 points. Traders seem happy to position for further drops in the cross with key event risk supporting the AUD.

The current interbank midrate is: AUDEUR 0.6991 EURAUD 1.4304
The interbank range this week has been: AUDEUR 0.6845- 0.7005 EURAUD 1.4277- 1.4606

The Australian Dollar (AUD) pushed higher over the week against the US Dollar (USD) as risk markets improved post the interest rate cut by the Bank of China. In efforts to stimulate the economy the PBOC announced a surprise cut from 2.75% to 2.50%. The Aussie rallied to 0.6980 where it currently sits. Fed officials said yesterday on TV that it was uncertain how much the Fed will raise rates at next month’s Fed meeting. Although high inflation calls for tighter policy, they are not ready to commit to the size of the next hike, this could be 75 or 50 points. Opinions by members are suggesting inflation may ease over the coming months which could change things dramatically. Further rises in the cross may be limited as the AUD looks a tad overbought.

The current interbank midrate is: AUDUSD 0.6972
The interbank range this week has been: AUDUSD 0.6854- 0.6989

The New Zealand Dollar (NZD), British Pound (GBP) has consolidated this week around the 0.5265 (1.90) zone with not a lot of action going on. Manufacturing data was poor, the index releasing at 46.0 agst 51.0 predicted with a slowdown in business activity across the sector evident. NZ Retail Sales declined 2.3% against expectations ending the June quarter highlighting a proper drop in spending volumes which will become worse over the coming months. It should be a quiet end to the week’s trading.

The current interbank midrate is: NZDGBP 0.5253 GBPNZD 1.9036
The interbank range this week has been: NZDGBP 0.5227- 0.5293 GBPNZD 1.8891- 1.9129

The big mover this week has been the Australian Dollar (AUD), appreciating over most major currency pairs and outperforming the New Zealand Dollar (NZD) to 0.8930 (1.1200). It’s been a while since we have seen such a decisive move by the AUD, extending last week’s push from 0.9090 (1.1000) to the September 2015 current level. NZ Retail Sales q/q printed down on expectations at -2.3% vs 1.7% expected putting the kiwi under pressure. Omicron knocked consumer spending in the first half of the year raising prospects of a pending recession. Sellers of AUD should consider at current levels, anything under 0.9000 historically is considered fantastic levels.

The current interbank midrate is: NZDAUD 0.8915 AUDNZD 1.1211
The interbank range this week has been: NZDAUD 0.8915- 0.9030 AUDNZD 1.1074- 1.1217

Poor data out of the US midweek has helped the New Zealand Dollar (NZD) to push up from the 0.6150 low against the US Dollar (USD) to clock 0.6250 early this morning. Risk flows returned after China’s decision to take more action from an underperforming economy and concerning housing market situation was well received by markets. The PBOC cut their interest rate from 2.75% to 2.5% in a surprise move sending a strong message to policy makers suggesting they will do whatever it takes. Topside moves may be limited with recent chart moves indicating 0.6280 looks well overbought territory and shifts back to 0.6050 retesting the prior low look possible over the coming days.

The current interbank midrate is: NZDUSD 0.6217
The interbank range this week has been: NZDUSD 0.6155- 0.6249

Market Overview

Key Points:

• Markets kick off the week in a bad mood with equity markets all down as the realisation of a slow path of economic recovery looms
• The Jackson Hole symposium in Wyoming starts midweek
• Canadian Retail Sales up 1.1% in June vs 0.4% forecast
• The US Dollar (USD) is the strongest currency this month while the British Pound (GBP) and the Japanese Yen (JPY) are the weakest on the main board of currencies
• The PBOC has cut their interest rate in efforts to boost economic activity as the economy struggles to recover from the second quarter slowdown
• Russia will close the Nord Stream pipeline for 3 days which has sent gas prices soaring
• The world bank has warned of 80’s style debt crisis with higher-than-expected interest rates, the ongoing threat to covid lockdowns and supply chain concerns
• The Euro (EUR has fallen below parity against the US Dollar (USD) to 0.9942 this morning the first time this has happened since December 2002 Read more