FX News

The Australian Dollar reached a new November 2017 high of 0.5875 against the British Pound (GBP) in early week trading before giving back gains to 0.5740 (1.7430) midweek. UK Inflation rose to 10.1% Wednesday in July from June’s 9.4% after markets predicted 9.4%. This is the biggest read since 1982 with prices in Housing and utility costs leading the rises over 20% from 19.6% in June. This put the Pound under pressure over the past couple of days drifting to 0.5735 (1.7240) into Friday. The Bank of England have forecast their inflation to peak at 13.0% later this year before softening. Earlier Australian employment data came in poor with the participation rate falling to 66.4% the economy losing 40,000 jobs in July, while the unemployment rate clicked lower to 3.4% from 3.5%. The Aussie should outperform heading into the close.

The current interbank midrate is: AUDGBP 0.5793 GBPAUD 1.7265
The interbank range this week has been: AUDGBP 0.5736- 0.5884 GBPAUD 1.6993- 1.7432

The Australian Dollar (AUD) gave back gains after reaching 0.7120 earlier in the week traded into Friday around the 0.6910 zone. The greenback outperformed post a lower CPI report sending the AUD packing. Australian Job’s data also wasn’t overly supportive- the participation rate dropping to 66.4%, the economy losing 40,000 jobs in July, while the unemployment rate clicked lower to 3.4% from 3.5%. The US Fed is planning 4 more rate hikes in 2022 pouring overpriced fuel on the fire with a number of Fed officials concerned the Fed are overdoing it. The stock market has already started showing signs of buckling and could react negatively over the coming months if the Fed don’t get it right. Meanwhile, US Retail Sales came in flat unchanged from July having risen 0.8% in the month of June. Households without a doubt having to watch their spending habits as interest rates rise. Support into the weekly close at 0.6880 should hold- the 4-week low.

The current interbank midrate is: AUDUSD 0.6911
The interbank range this week has been: AUDUSD 0.6898- 0.7123

The New Zealand Dollar (NZD) has pushed lower against the Euro (EUR) over the week on risk aversion and general NZD weakness. Prices reached 0.6160 (1.6240) Thursday before returning to 0.6205 (1.6120) early this morning as equities recovered from early losses. Germany plans to lower the tax on gas to 7% to ease the burden on consumers. Currently the gas is set at 19%. The move comes after Brussels had previously rejected Germany’s request for an exemption on its new gas price levy. The Reserve Bank of New Zealand hikes its official cash rate to 3.0% from 2.5% as widely predicted, initially pushing the kiwi higher before retreating as Ore suggested tougher times ahead. Looking ahead we have French and German manufacturing numbers. We foresee further downside momentum for the kiwi in the coming days.

The current interbank midrate is: NZDEUR 0.6190 EURNZD 1.6155
The interbank range this week has been: NZDEUR 0.6153- 0.6308 EURNZD 1.5851- 1.6251

It’s been a choppy week in the New Zealand Dollar (NZD), British Pound (GBP) cross with a variety of data publishing. The GBP recovered off 0.5335 (1.8750) the 19-week low through to 0.5195 (1.9250) before arriving at 0.5245 (1.9060) into Friday. The RBNZ has hiked its cash rate to 3.0% – the fourth time in a row Wednesday, Orr saying full employment has supported decreased spending, but this won’t last with predictions of the labour market declines as consumers struggle with higher interest rates and the inflation squeeze. UK Inflation rose to 10.1% Wednesday in July from June’s 9.4% after markets predicted 9.4%. This is the biggest read since 1982 with prices in Housing and utility costs leading the rises over 20% from 19.6% in June. This put the Pound under pressure for a period drifting from 0.5210 (1.9200) to 0.5245 (1.9070) The Bank of England have forecast their inflation to peak at 13.0% later this year before coming softening. Key standouts next week are UK Manufacturing and NZ Retail Sales.

The current interbank midrate is: NZDGBP 0.5231 GBPNZD 1.9116
The interbank range this week has been: NZDGBP 1.8735- 1.9241 GBPNZD 0.5197- 0.5337

Big Dollar strength this week has shifted the New Zealand Dollar (NZD) off its high of 0.6450 to 0.6240 in early Friday trading reversing all last week’s moves. The US Dollar (USD) has been well bid as mood has been risk averse. The Reserve Bank of New Zealand hiked the Official Cash Rate to 3.0% from 2.5% Thursday as predicted making this the fourth time in a row they have hiked 50 points apiece. The interest rate is now at a 7 year high with Adrian Orr saying the peak could be over 4% by mid next year if rising inflation doesn’t turn lower. Ore said household balance sheets were still healthy, but demand will come out of the market in the coming months as spending slows as labour market demand falls. The Fed minutes confirmed the Fed will remain on their tightening path, but several Fed members are getting nervous that the Fed is going in too hard and raising rates too fast. Solid support on the chart at 0.6220, we expect this should hold.

The current interbank midrate is: NZDUSD 0.6245
The interbank range this week has been: NZDUSD 0.6236- 0.6456

The New Zealand Dollar (NZD), Australian Dollar (AUD) cross continues to trade in a tight range this week pivoting around the 0.9050 zone with a lack of intent. The Reserve Bank of New Zealand hiked the OCR to 3.0% from 2.5% saying they will continue to raise rates through to mid next year peaking somewhere around 4.0% – if they continue to do this, economic growth will suffer, and NZ will dive into a deep recession. The Australian unemployment rate published down at 3.4% from 3.5% in June beating forecasts, however the participation rate has fallen to 66.4% and the economy lost 40,000 jobs in the month. Anything over 0.9000 still represents good buying of AUD

The current interbank midrate is: NZDAUD 0.9301 AUDNZD 1.1060
The interbank range this week has been: NZDAUD 1.0984- 1.1080 AUDNZD 0.9025- 0.9104

Market Overview

Key Points:

• Chinese economic outlook spooks markets Monday with risk assets down across the board
• China’s jobless rate for 16–24-year-olds has hit its highest level ever recorded at 19.9%
• We are expecting similar rhetoric at Wednesday’s RBNZ meeting with the central bank predicted to hike rates from 2.5% to 3.0%. It’s highly probable we could see rates spike around the 3.75%, mark with another 50-point rise in October and more in November
• The New Zealand Dollar (NZD) and the Australian Dollar (AUD) were the biggest movers last week with the US Dollar (USD) losing ground post the CPI release
• Japan’s second quarter growth came in at 0.5% from 0.7% predicted avoiding slipping formally into recession after first quarter results were -0.2%
• New highs in US stocks were reported at Friday’s close with the Nasdaq leading the way up 1.5% reaching 13026
• UK Prelim GDP -0.1% vs -0.2% expected, prior was 0.8% as household consumption declines
• Crude oil is down over 3.0% overnight amid a statelate in the Iran deal with Tehran
• European gas prices have extended 10.7% on the day making benchmark TTF its highest close ever Read more

The Australian Dollar (AUD), Euro (EUR) cross hovers around the April 2017 high at 0.6915 (1.4460) this morning after a large run to the topside last week. Key big figure resistance and the physiological level of 0.7000 (1.4285) will be tough to conquer. However, if we see lower Australian employment data published tomorrow anything is possible. The Euro came under pressure to close out the week with energy crisis headlines seen as the driving force behind the weakness with French and German electricity prices reaching record highs. A heat wave across the European continent and gas remains issues in the region moving forward and could hinder EUR bidding.

Current Level: 0.6904 (1.4484)
Resistance: 0.7000 (1.5280)
Support: 0.6545 (1.4300)
Last Weeks Range: 0.6784-0.6946 (1.4396-1.4739)

The Australian Dollar (AUD) pushed through long range resistance last week at 0.5825 (1.7170) to post a fresh November 2017 high of 0.5875 (1.7020) at the close. Monday price extended to 0.5880 (1.7000) before the Pound recovered on risk aversion to 0.5815 (1.7200) into Tuesday. Growth in the UK fall to -0.1% in the second quarter of 2022 coming in slightly better than forecast of -0.2%. However, it’s still a negative read which puts the British economy threatening a possible recession in the coming months. Cleary growth has stagnated as the squeeze on “real” income and higher interest rates takes a toll. UK CPI is expected to release around 9.4% tomorrow, some predicting this could be much higher. Of note on the calendar we have Aussie employment Thursday with the unemployment rate expected to remain stable at 3.5%. Buying GBP still looks extremely attractive around these levels.

Current Level: 0.5820 (1.7182)
Resistance: 0.5890 (1.7800)
Support: 0.5620 (1.6970)
Last Weeks Range: 1.5721-0.5873 (1.7025-1.7479)

Early Monday poor Chinese data took the Australian Dollar (AUD) lower from the weekly open at 0.7120 to 0.7010 this morning as markets reverted to “risk off”. The AUD has had a good run to new highs of late based on Fed speak, lower CPI read and renewed optimism in stocks. The aggressive selloff in the US Dollar (USD) as the Fed re-price rate hike expectations has impacted mostly with the Fed to start easing up on policy. The risk on moves may be short lived, buyers of the greenback should consider while still able to buy above the 0.7000 mark. This week’s Aussie job’s numbers presents key data with unemployment expected to post around the current 3.5%. Watch out for US Retail Sales as well Thursday, a fundamental measure of economic performance, anything less than 0.1% could weaken the pair.

Current Level: 0.7018
Resistance: 0.7140
Support: 0.6850
Last Weeks Range: 0.6898-0.7135