FX News

The Euro remained on the backfoot last week falling against the New Zealand Dollar (NZD) to 0.6320 (1.5830) as several factors continue to take a heavy toll on the European economy. Spurring gas prices, inflation driven products and the war in Ukraine have all held up the EUR over recent weeks from creating any reasonable momentum not just agst the NZD but across the board of currencies. The EUR kicked back Monday to 0.6250 (1.6000) levels but with the RBNZ predicted to raise rates 50 points tomorrow we may see further upside bias eventuate.

Current Level: 0.6256 (1.5984)
Resistance:0.6345 (1.6320)
Support: 0.6130 (1.5760)
Last Weeks Range: 0.6126-0.6313 (1.5839-1.6322)

The English Pound (GBP) has extended losses through pivotal support at 1.9000 (0.5265) against the New Zealand Dollar (NZD) reaching 1.8720 (0.5340) overnight before recovering to 1.8940 (0.5280) the weekly open. The UK inflation rate jumped to 9.4% y/y in June, the highest it’s been since 1982 above estimate of 9.3% and May’s 9.1%. Pressures on fuel and food prices remain an issue with petrol prices climbing 18% per litre in June, the largest single month jump since 1990. July’s forecast out tomorrow is predicted to be around 9.4% with some predicting further rises into the 10’s. The highlight on the calendar this week is the RBNZ cash rate release with markets widely predicting a 50-point hike. Talk around further rises is our main focus and should drive price in the pair either way.0.5350 (1.8700) Looks solid resistance on the chart, the kiwi would be doing well to make a clean break higher.

Current Level: 0.5274 (1.8960)
Resistance: 0.5240 (1.9120)
Support: 0.5230 (1.8730)
Last Weeks Range: 0.5164-0.5337 (1.8736-1.9362)

Both the New Zealand Dollar (NZD) and Australian Dollar (AUD) look equally volatile in current markets with yesterday’s poor Chinese data and US Dollar outflows not really impacting this pair. Sideways trading around the 0.9050 (1.1050) area remains the theme. The upcoming RBNZ rate announcement tomorrow could shake things up, the RBNZ widely predicted to hike interest rates from 2.5% to 3.0% in efforts to bring down rising inflation. Although mostly priced in the kiwi may spike on the news- anything above 0.9000 still looks good buying.  Aussie jobs numbers prints towards the end of the week.

Current Level: 0.9060 (1.1033)
Resistance: 0.9100 (1.1170)
Support: 0.8950 (1.0990)
Last Weeks Range: 0.8989-0.9089 (1.1016-1.1124)

The New Zealand Dollar (NZD) outperformed the US Dollar (USD) last week with the run up to 0.6460 a 10-week high. Monday’s risk averse tone has taken price back to 0.6350 this morning when it looks to have consolidated. US CPI surprised markets coming in at 8.5% from the predicted 8.7 much lower than the previous month’s 9.1% 40 year high, offering optimism to risk buyers as the Fed start thinking about re-pricing their upcoming rate hike forecasts. Greenback outflow Monday as poor Chinese data in the form of Industrial production- 3.8% vs 4.6% expected and weaker employment took the kiwi lower. The cross is still trading within its 6-week bull channel but be weary of a continuation of further movement to the downside and a break though channel support at 0.6280. RBNZ is tomorrow with a 50 point move higher to 3.0% widely expected.

Current Level: 0.6360
Resistance: 0.6550
Support: 0.6320
Last Weeks Range: 0.6228-0.6478

Monday 15/08
2:00pm, CNY, Retail Sales y/y
Forecast: 5.00%
Previous: 3.10%
All Day, EUR, French Bank Holiday
All Day, EUR, Italian Bank Holiday

Tuesday 16/08
12:30am, USD, Empire State Manufacturing Index
Forecast: 5.1
Previous: 11.1
1:30pm, AUD, Monetary Policy Meeting Minutes

Wednesday 17/08
12:30am, CAD, CPI m/m
Previous: 0.70%
12:30am, CAD, Common CPI y/y
Previous: 4.60%
12:30am, CAD, Median CPI y/y
Previous: 4.90%
12:30am, CAD, Trimmed CPI y/y
Previous: 5.50%
1:30pm, AUD, Wage Price Index q/q
Forecast: 0.80%
Previous: 0.70%
2:00pm, NZD, Official Cash Rate
Forecast: 3.00%
Previous: 2.50%
2:00pm, NZD, RBNZ Monetary Policy Statement
2:00pm, NZD, RBNZ Rate Statement
3:00pm, NZD, RBNZ Press Conference
6:00pm, GBP, CPI y/y
Forecast:9.90%
Previous: 9.40% Read more

As with most currency pairs, The AUD/EUR has enjoyed a move higher over the last 72 hours on the back of a weaker USD globally. Inflation remains at the forefront of all market concerns, and the recent “slow down “in the USA CPI number has seen the USD weaken across the board, lending support to all other currencies. The pending winter energy crisis in Europe, amongst the ongoing Russia-Ukraine conflict, and the ever-increasing Western European sanctions all combine to increase the pressure on the general cost of living which will continue to keep the lid on any strong move higher in the EUR/USD. German Inflation data out during the week came in at a record 7.5 %, thus putting extra strain on the Regions most powerful economy. Australian Financial market activity has remained relatively subdued this week, with the China-Taiwan tensions in the region keeping people on edge. Some positive news from a surprisingly improved Australian business confidence figure, coupled with the softer USD, has meant the AUD/EUR cross ends the week on its highs, around .6850 level. This remains great buying levels short term with any move to .6900 worth a look for longer term hedging requirements.

Current Level: 0.6880
Resistance: 0.6910/0.6940
Support: 0.6790/0.6835
Last Weeks Range: 0.6808/0.6896

AUD/GBP has benefited from a weaker USD globally, as the markets digest the better-than-expected US Inflation & PPI data, which smoothed the perceived risk of ongoing aggressive interest rate hikes thus softening the USD. The main driver of the lower-than-expected US inflation number appears to be a drop in local gas prices, which is ironic considering the Global Energy crisis the world faces currently and the fact that Crude Oil prices are also still high. On the horizon for GBP/USD is tomorrow’s UK GDP figure due out, with anything less than the expected number causing further concerns for the UK economy, thus seeing the GBP/USD depreciate which could lend some support to the AUD/GBP cross on its move towards .5850. Local Australian Market news remains static, with eyes firmly on the China-Taiwan tensions in the region. Suggest any buying above .5800 remains a great short-term target for importers.

Current Level: 0.5823
Resistance: 0.5855/0.5880
Support: 0.5745/0.5788
Last Weeks Range: 0.5743-0.5836

AUDUSD cleared .7040 and traded to .7103. Which we last saw in June. We expect the AUD to show strength back towards those previous highs of .7280. On a break of .7180 over the coming week. As the appetite for risk assets returns following the better than expected US inflation data released this week. All eyes are now on the Fed Sept 21 interest rate move. Markets will be wanting another 75bp hike. Let’s see if the Fed alters its approach following the better the expected inflation print.

Current Level: 0.7100
Resistance: 0.7170/0.7235
Support: 0.6900/0.7000
Last Weeks Range: 0.6921/0.7129

After a quiet start to the week hovering around .6140 the NZDEUR, along with all the major currency pairs, reacted on Wednesday night to the USD inflation data missing market expectations and falling to 8.5%. This sent the reserve plummeting and gave commodity currencies a boost. The NZDEUR subsequently jumped to .6227 as the EUR lagged due to the ongoing energy crisis and their own inflationary problems casting a shadow of doubt over the EU. German CPI data came in at 7.5% on the same night – in line with expectations but hardly anything to brag about. Following Wednesday night’s market action, the NZDEUR settled around .6210 and we will await next week’s EU zone GDP and core inflation data due on the 17th and 18th of August respectively. The declining strength in the EUR and ongoing energy problems heading into winter suggests this pair could see more volatility in the months ahead.

Current Level: 0.6228
Resistance: 0.6240/0.6290
Support: 0.6070/0.6110
Last Weeks Range: 0.6115-0.6241

One of the big movers this week was the NZD/GBP pairing which started the Monday at .5156 and finishing the week around .5250. Once again inflationary talk was the key driver in the market as .5250 continues to hold strong resistance. Watch closely for tonight’s key UK GDP number as anything less than expected could threaten a break toward .5300 and beyond. Last time was March this year. The next BoE interest rate meeting not till Sept 15th . No doubt the next month will continue the theme of ‘inflationary hype’ causing much volatility in the market. For those buyers of kiwi, we recommend anything around .5220 is a good opportunity to convert in the short term. However, be careful pressure to move higher persists.

Current Level: 0.5272
Resistance: 0.5302/0.5330
Support: 0.5180/0.5225
Last Weeks Range: 0.5156-0.5286