FX News

The New Zealand Dollar (NZD) pulled back from 0.5925 (1.6880) late last week against the Euro (EUR) as risk improved taking price to 0.5990 (1.6700) levels where the market closed. Equities were sold aggressively towards the end of Monday – the Nasdaq down nearly 1% sending price in the cross back towards 0.5950 (1.6800) levels. The ECB will address inflation later in the week, forecasted to be 8.5% y/y up from 8.1% this will give the ECB a hurry along to increase the cash rate already expected to increase 150 points by year end. The kiwi could continue to struggle as we mentioned earlier, we predict price to retest the 0.5920 (1.6900) zone, the late Feb 2022 level.

Current Level: 0.5954 (1.6795)
Resistance: 0.6045 (1.7320)
Support: 0.5775 (1.6540)
Last Weeks Range: 0.5920-0.6061 (1.6498-1.6890)

UK inflation printed at 9.1% as predicted last week amid soaring food and energy prices as the cost of living toughens. The New Zealand Dollar (NZD) posted a fresh low of 0.5100 (1.9620) against the British Pound (GBP) before losing ground towards the week closing around 0.5150 (1.9430). The Bank of England cash rate sits at 1.25% a 13-year high and is predicted to rise further as CPI expectations climb towards 11% forecasts by October. Speeches by the ECB Wednesday could create volatility especially if they speak of upcoming rate rise predictions. With risk factors globally remaining dire we expect the cross to retest 0.5085 (1.9670) the March 2022 low.

Current Level: 0.5130 (1.9493)
Resistance: 0.5185 (1.9630)
Support: 0.5095 (1.9280)
Last Weeks Range: 0.5095-0.5210 (1.9191-1.9625)

The New Zealand Dollar (NZD), Australian Dollar (AUD) remains within recent price ranges, consolidating around the 0.9100 (1.10) areas. Directional cues will be difficult to read this week with little on the economic calendar to write home about. Earlier today RBA governor Lowe rocked the boat when he said worker pay rises should be capped at 3.5%. Match that with CPI at 5.1% and he has annoyed many. Iron ore prices have fallen recently from 147.00 per ton to 112.00 and look to have stabilised around this level as China lockdowns eased. The Aussie looks to have the upper edge over the past few hours and could get further support if “risk” deteriorates towards the end of the week. Next week’s RBA imminent cash rate increase could also add AUD upside bias.

Current Level: 0.9094 (1.0988)
Resistance: 0.9150 (1.1130)
Support: 0.8985 (1.0930)
Last Weeks Range: 0.9049-0.9146 (1.0933-1.1050)

The New Zealand Dollar (NZD), US Dollar (USD) remains in its tight range from last Thursday sitting around 0.6300 areas. This is slightly down on earlier 0.6325 levels Monday as equities quiver posting small losses, all and all not a lot of excitement. Scaled back fed hike expectations may give the kiwi a further boost this week but we are yet to see any momentum develop. The G7 is in progress in Germany where they have been discussing the war in Ukraine and how it has opened up global challenges. Leaders have promised to stay in support of Ukraine to the bitter end, Ukraine’s president has appealed for additional weapons from western allies. Zelensky hopes the war will be over before winter sets in late this year. US Durable Goods Orders printed at 0.7% vs 0.4% expected as US companies continue to spend meanwhile contracts on existing homes in the US improved 0.7% m/m for May improving on the last 6 months of data. Final GDP for the first quarter is forecast to print -1.5% and represent the first quarter of a potential recession if the second quarter is also negative. We expect price in the cross to drift lower this week towards 0.6200 lows.

NZD/USD Rates:
Current Level: 0.6299
Resistance: 0.6400
Support: 0.6220
Last Weeks Range: 0.6243-0.6362

Prices in the Euro (EUR), Australian Dollar (AUD) sit around the weekly open at 0.6620 (1.5100) areas into Tuesday after with risk currencies a little more supported in recent sessions. The Eurozone fallout from the energy shortage came back into focus meanwhile the CPI forecast was revised to 8.1% questioning ECB policy. Lagarde spoke overnight confirming her intentions to raise their benchmark rate 25 points in July and that they were still working on anti-fragmentation tool. This will enable them to raise rates and bring down decelerate inflation back to their 2.0% target. The RBA minutes release later today and should focus on rising inflation. We think the recent trend movement from the high of 0.6780 (1.4750) will continue this week towards 0.6530 (1.5320) support.

Current Level: 0.6616 (1.5114)
Resistance: 0.6775 (1.5320)
Support: 0.6530 (1.4760)
Last Weeks Range: 0.6584-0.6729 (1.4861-1.5188)

Early week wobbles in the British Pound (GBP) were replaced with underperforming risk currencies with the Australian Dollar (AUD) on the back foot. Price extended to 0.5675 (1.7620) just shy of the fortnight low with the currency looking at lengthening out. This week’s RBA minutes later today should be more of the same rhetoric of how the economy plans to bring down rising inflation. Governor Lowe expects inflation to peak around 7.0% by the end the year. Expectations are for another rise to their cash rate of 50 points at their July and August meeting. UK inflation prints tomorrow and is predicted to reflect further squeezes to consumer prices and 9.1% untick. It wouldn’t surprise us if we saw the 3 month daily low tested at 0.5620 (1.7800) this week if markets remain risk averse.

Current Level: 0.5673 (1.7627)
Resistance: 0.5780 (1.7820)
Support: 0.5610 (1.7300)
Last Weeks Range: 0.5663-0.5778 (1.7307-1.7658)

Improvement in stocks Monday took the US Dollar (USD), Australian Dollar (AUD) to just shy of 0.7000 briefly before falling lower to 0.6960 as the DOW index ended the day flat. Greenback weakness from last week’s fallout from the Fed raising rates to 1.75% is evident highlighting slower growth prospects on the horizon. The result of guidance suggested at 50-75 points in July and two more large increases before the end of the year will inevitably stifle job’s data and downgrade growth. The big story has been iron ore- down from last week’s 146 per ton to 125 this morning in light of Chinese covid lockdown fears and weaker steel production due to softer margins. The price of rebar has been hit hard down 9% signalling construction has slowed due to sharp covid restrictions. On the calendar we have RBA’s Lowe’s minutes of the June 7th policy meeting and Fed chair Powell testifying Thursday. For those looking at buying USD- roadblock resistance on the chart around 0.7060 will be tough to breach.

Current Level: 0.6957
Resistance: 0.7040
Support: 0.6850
Last Weeks Range: 0.6848-0.7066

A quiet start to the week in the New Zealand (NZD), Euro (EUR) cross saw price drift around 0.6035 (1.6570) levels into Tuesday with a slight improvement in the EUR developing. Lagarde spoke overnight about her hiking plans and how the war in the Ukraine means the Euro economic area is still under mass uncertainty . She made her intentions clear to hike rates in July and September. The new anti-fragmentation tool should assist in allowing them to hike rates with the ultimate goal of bringing down inflation back to their 2.0% target. We predict the kiwi to struggle over the next few days driven by risk sentiment. On the calendar this week we have Eurozone production output and German producer prices.

Current Level: 0.6015 (1.6625)
Resistance: 0.6105 (1.6850)
Support: 0.5935 (1.6380)
Last Weeks Range: 0.5934-0.6060 (1.6501-1.6851)