FX News

The tumbling reserve news saw commodity currency movements as the Australian dollar rose from below .9000 back up towards .9050. Eyes remain focused on central banks and interest rates to further movements with RBNZ announcements out next week. Australian Unemployment numbers are announced next week which were previously reported at 3.5% dipping from previous months. The NZD/AUD are still within a tighter range of .8990 – .9060. This stays consistent with monthly ranges of similar numbers as the cross stays steady within the markets.

Current Level: 0.9054
Resistance: 0.9090/0.9130
Support: 0.8990/0.9020
Last Weeks Range: 0.8990/0.9063

After a slow start of the week, with little to no movement, Thursday’s US CPI Inflation sparked a rise in risk appetite, with the VIX index trading below 20 for the first time in 4 months. Both the S&P500 and NASDAQ were up over 2%. As always, the kiwi tailcoated on this ride and got past the .6400 level for the 1st time since the start of June, also with a 2% surge. After spending most of this week in the .6250-.6300 range, this was a “break” many were waiting for. But one good CPI does not change the fragile global outlook. Next week’s RBNZ Policy meeting is expected to hike to OCR by 50 bps, this could potentially push the NZD higher again, so buyers of the USD should pay attention.

Current Level: 0.6428
Resistance: 0.6465/0.6525
Support: 0.6210/0.6305
Last Weeks Range: 0.6221-0.6423

Market Overview

Some reversal of Friday’s price action, with US Treasury yields lower and USD lower
NZ rates follow offshore move higher but then fall after RBNZ inflation expectations figures show a drop
Yellen says the US economy remains resilient despite headwinds
The US Government just passed yet another spending bill, up to USD$750 Billion, which will be funded by further debt and the Fed, called the “Inflation Reduction Act”
NZD and AUD outperform, temporarily breaking above 0.63 and 0.70 overnight
RBNZ 2-yr inflation expected. (%), Q3: 3.07 vs. 3.29 prev.

The AUD/EUR cross remains largely range bound for the moment, between .6800-.6850, all eyes on the US inflation data and pending winter energy crisis for change.European stocks enjoyed a solid start to the week, keeping any move above .6850 at bay.This should be the short term target for those that are looking to buy.

Current Level: 0.6851
Resistance: 0.6900
Suport: 0.6750
Last Weeks Range: 0.6797-0.6851

The AUD/GBP cross has benefited recently from a struggling GBP/USD amongst political instability in the UK, albeit this major has recovered a little on the back  of the weaker USD. As with all of Europe the pending Energy crisis as winter approaches will keep the GBP/USD under some pressure, leading to a potentially stronger AUD/GBP in the short term. Buying above .5750 great levels with .5800 a more medium term target.

Current Level: 0.5782
Resistance:0.5810
Support: 0.5690
Last Weeks Range: 0.5710-0.5800

The Australian Dollar (AUD) continues to extend gains against the US Dollar (USD) as it briefly hit the key 0.7000 figure overnight. Reaction to the strong US Employment and wages data from last week has seen some commentators suggest that the Fed may re-think their more aggressive interest rate hike, thus softening the USD a little against all other currencies.Localised tensions in Taiwanese waters haven’t had a major effect on the AUD/USD rate, but remain an “element of real risk” so worth being watchful here. Buying at key level of .7000 a target for all.

Current Level: 0.6985
Resistance: 0.7010
Support: 0.6890
Last Weeks Range: 0.6911-0.7003

The Euro (EUR) is very similar to the GBP, stuck in a trading range .6130-.6180. Catalysts for some changes to this would be a possible hard recession in Germany and the pending energy crisis in Europe leading into winter. European Stocks enjoyed a positive start to the week as the USD struggled against all pairs ahead of the key Inflation data due. Any short term buying above .6150 looks solid with .6200 a seemingly tough nut to crack.

Current Level: 0.6164
Resistance: 0.6210
Support: 0.6075
Last Weeks Range: 0.6090-0.6178

The British Pound (GBP) continued to rally at the start of the week, hitting 1.9230 (.5200) and looking very stubborn in the 1.9420 (.5150) – 1.9230 (.5200) area. With the impending energy crisis in Europe looming, this could change, as the cooler months arrive. Underlying theme remains Global inflation and interest rate measures by Central Banks, with US Inflation data due out later in the week a key short term indicator. Any buying of GBP v NZD around .5200 should please.

Current Level: 0.5201
Resistance: 0.5250
Support: 0.5120
Last Weeks Range: 0.5139-0.5206

The New Zealand Dollar (NZD) has traded sideways at the start of the week, sitting around the .9000. We did see a short spike to .9040 late Friday, but that evaporated in the early Monday trading session. Tensions in Taiwan waters remain of concern to Australian and NZ markets, so keeping a watchful eye on this is worthwhile. For the moment buying at .9000 worth a look.

Current Level: 0.9000
Resistance: 0.8920
Support: 0.9050
Last Weeks Range: 0.8958-0.9011

It has been a slow start to the week with little newsflow. The market has reversed some of Friday night’s post US payrolls reaction, seeing a broadly weaker US dollar and lower Treasury yields. Overnight, the NZD and AUD have outperformed, trading over 0.63 and 0.70 respectively, and currently sitting just under those levels.
The NZD and AUD haven’t been adversely affected by China’s decision to extend its military exercises surrounding Taiwan, continuing training “under real war conditions”, as the People’s Liberation Army has described it. The NZD dipped a little after yesterday afternoon’s inflation expectations data but rallied up through 0.63 overnight and is currently settling around 0.6280, after a softer USD in the overnight market. At the moment, buying should be considered at .6280-.6300.

Current Level: 0.6285
Resistance: 0.6300
Support: 0.6200
Last Weeks Range: 0.6205-0.6305