FX News

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

Key Points:

Rising inflation and central bank cash rate rises into recessions, paints difficult and strange times ahead, looming gas prices and supply chain issues will cause issues for some time to come- the Russia-Ukraine war ensures more isolated problems particularly for the Eurozone region with Germany expected to go deep into recession over the second part of 2022
US recession definitions are being debated as to what officially constitutes a formal recession after the “prelim” US GDP published negative overnight
Yellen says the US economy remains resilient despite headwinds
Chinese Xi and US President Biden spoke on the phone for over two hours- I suppose this is a good sign?
US jobless claims 256k vs 253k estimate Read more

The Euro struggled earlier in the week falling to 1.4500 (0.6900) levels against the Australian Dollar (AUD) before recovering Thursday reaching 1.4600 (0.6850) early Friday. The expected Fed hike and CPI read sent equity prices higher supporting the Aussie mostly. German GfK consumer confidence sank to2 a record slow as JP Morgan downgraded their Eurozone economic forecasts. Australian CPI q/q came in at 1.8%, raising the year-on-year number ending June 2022 from 5.1% to 6.1% – rising prices in food and fuel the main drivers. The data should push the RBA to hike rates aggressively by 0.50% or more at Tuesday’s meeting.

The current interbank midrate is: AUDEUR 0.6857 EURAUD 1.4583
The interbank range this week has been: AUDEUR 0.6755- 0.6894 EURAUD 1.4504- 1.4803