FX News

New Zealand Dollar (NZD) should be trading higher against the British Pound (GBP) but with recent weakness stemming from frailty in the housing market and a higher forecasted cash rate the kiwi has been hit hard. Prices into early Tuesday sit around 0.5235 (1.9100) as the cross awaits data cues for direction. Predictions are for UK inflation to hit 15% in early 2023 unless the govt steps into lower rising prices. This will no doubt put the economy in recession which in turn should take down the GBP. NZ Retail Sales is predicted to print well Thursday, combined with a shift to “risk on” we could see positive moves this week for the kiwi.

Current Level: 0.5249 (1.9051)
Resistance: 0.5365 (1.9270)
Support: 0.5190 (1.8640)
Last Weeks Range: 0.5196-0.5337 (1.8737-1.9243)

Although the New Zealand Dollar (NZD), Australian Dollar (AUD) cross has flatlined in recent months trading mainly between 0.9010 (1.1100) and 0.9110 (1.0980) ranges, the pair still sits in the long-term bear trend channel from November 2021’s 0.9710 (1.0300). The Aussie outmuscled the kiwi firming up overnight to trade below the key 0.9000 (1.1110) level to reach 0.8965 (1.1155). Looking ahead this week’s economic calendar is thin with just NZ Retail Sales q/q printing. We expect further AUD strength to develop if the currency can climb through 1.180 (0.8945) resistance/support.

Current Level: 0.8976 (1.1138)
Resistance: 0.9110 (1.1180)
Support: 0.8945 (1.0980)
Last Weeks Range: 0.8973-0.9104 (1.0984-1.1144)

The New Zealand Dollar (NZD) retreated to 0.6160 this morning against the US Dollar (USD) as a risk off tone engulfs markets. The recent move from last week’s 0.6440 high is decent as momentum is firmly with the greenback with investors exiting the kiwi. US Stocks clocked losses between 2-3% in overnight trading following talk of much higher inflation warnings. Fed officials are to blame for a chunk of greenback support of late post the recent encouraging lower read with US inflation, however it’s far too early to come to any conclusion over whether inflation has spiked just yet. It’s a thin week of data releases, our focus will be on NZ Retail Sales Thursday and Fed’s Powell speaking late in the week at the Jackson Hole Symposium. On the chart a drop through 0.6100 looks dangerous- the May 2020 low, a break past support here and its thin air until 0.5650.

Current Level: 0.6179
Resistance: 0.6350
Support: 0.6100
Last Weeks Range: 0.6165-0.6453

Tuesday 23/08
7:15pm, EUR, French Flash Services PMI
Forecast: 52.9
Previous: 53.2
7:15pm, EUR, French Flash Manufacturing PMI
Forecast:49
Previous:49.5
7:30pm, EUR, German Flash Manufacturing PMI
Forecast: 48
Previous: 49.3
7:30pm, EUR, German Flash Services PMI
Forecast: 49
Previous: 49.7
8:30pm, GBP, Flash Manufacturing PMI
Forecast: 51
Previous: 52.1
8:30pm, Flash Services PMI
Forecast: 52
Previous: 52.6 Read more

Key Points:

US Inflation came in lower at 8.5% from 9.1% in June with Fed’s George saying it’s not time yet to be celebrating
US Existing Home Sales 4.81M vs 4.89 prediction
Canada’s Producer Price Index for July -2.1% vs -1.1% in July
The US Dollar (USD) is the strongest currency this week while the New Zealand Dollar (NZD) has been the weakest on the main board of currencies
Fed Minutes has all but confirmed a hike of 50 points at their September policy meeting
ECB’s Schnabel says the outlook for the ECB has not changed, growth is going to be slow and a recession in the area is possible

The risk off tone this week in the wake of a lack of conviction by the Fed and softer German ZEW weighed on the EUR a tad but setbacks were supported by a recovery in European stocks. The Australian Dollar (AUD) slumped to 0.6795 (1.4720) recovering in early Friday sessions to 0.6860 (1.4580) 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%. Next week’s key data comes in the form of Eurozone Manufacturing data. Sellers of Euro should consider below 0.6900 as the long-term AUD bull trend gathers space.

The current interbank midrate is: AUDEUR 0.6850 EURAUD 1.4598
The interbank range this week has been: AUDEUR 0.6797- 0.6954 EURAUD 1.4380- 1.4712

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