FX News

The Australian Dollar (AUD) orbited to 1.0960 (0.9355) vs the New Zealand Dollar (NZD) in this morning trading posting a fresh 9 month high and muscling past earlier resistance at 1.0920 (0.9160). The Official RBNZ Cash rate caused commotion when the central bank raised the interest rate from 1.0% to 1.5%- initially the kiwi surged to 1.0830 (0.9235) but was soon sold off unable to hold gains as dovish RBNZ communication filtered through markets. Commodity prices continue to impress, outperforming the Aussie. Today’s Australian job’s data is predicted to shine with the unemployment rate expected to come in under 4.0% the first time in well over 20 years. A weekly close below 0.9125 (1.0960) marks a January 2017 low and would signal further upside pressures in the AUD.

Exchange Rates:
The current interbank midrate is:NZDAUD 0.9123 AUDNZD 1.0951
The interbank range this week has been: NZDAUD 0.9114- 0.9242 AUDNZD 1.0821- 1.0972

Key Points:

• ECB’s Nagel has said the central bank will make a rate decision in the May meeting- interest rates are expected to be hiked earlier than predicted and could rise to 1.5% to 2.0% in the long term
• Shanghai is in the middle of a complete lockdown with the population of 26 million been tested
• The UK is gearing up to send armoured vehicles to Ukraine
• Australian Trade Balance figures reported a large miss in February at 7.46B with expectations of 12B predicted
• Bank of Japan’s Noguchi sayings if energy prices continue to rise it will raise inflation and dampen the economy
• Calls by analysts post the earlier week’s RBA meeting are suggesting the RBA could lift rates in the May meeting forward from August after Governor Lowe was more hawkish than anticipated 
• Indications from the FOMC suggest they will hike the Fed rate 50 points in early May and again later in the year

The Euro (EUR) Extended its run of declines through Wednesday the cross posting 0.6980 (1.4320) a fresh April 2017 – 4 year high. Eurozone sentiment is still being pounded with March figures dropping 5 points to 108 against expectations of 109 as consumer confidence nose dives. Ukraine is seeking much tougher sanctions on Russia as the war rages on leaving more than 4 million people either killed, injured, or vacated. Nearly a quarter of the population have been left1 homeless leaving Russia nearly totally isolated on the world stage. Ukraine president Zelenskiy has said more needs to be done as they are left vulnerable to further attacks. US and European equities improved Thursday improving sentiment and moving price in the cross back to 0.6880 (1.4540). The key standout on next week’s economic docket is the ECB rate release and statement.

Exchange Rates:
The current interbank midrate is: AUDEUR 0.6881 EURAUD 1.4532
The interbank range this week has been: AUDEUR 0.6777- 0.6985 EURAUD 1.4317- 1.4755

The Australian Dollar (AUD) extended gains over the British Pound (GBP) this week to 0.5820 (1.7180) Wednesday bouncing off the January 2018 high. The RBA decided to retain the current cash rate of 0.10% Tuesday in the wake of supply chain issues, inflationary pressures, and ongoing problems in the Russian war against Ukraine. Bond values have risen and so have future interest rate increase prospects. Lowe saying the country remains resilient as they shake off Omicron. Also of note is unemployment which is expected to drop below 4% this year. We expect interest rates to be hiked as early as next month ahead of June’s expectation back from August 2022 forecasts. The GBP was unable to hold 0.5800 drifting back to 0.5720 (1.7480) Friday over hawkish Fed speak and risk shifts. Key focus next week is Aussie employment data.

Exchange Rate:
The current interbank midrate is: AUDGBP 0.5721 GBPAUD 1.7479
The interbank range this week has been: AUDGBP 0.5711- 0.5823 GBPAUD 1.7173- 1.7508

The Australian Dollar recorded 0.7650 midweek against the US Dollar (USD), posting a new high in the long-term bull trend from the low of 0.6960 back in late January. However, it was unable to push on reversing back to 0.7480 into Friday coming under pressure from Fed speak. The RBA is expected to hike this year, we think this could be as soon as the May meeting with Lowe signalling, they would lift rates over the “coming months.” The AUD has been profiting from surging prices in raw materials lately- Iron Ore has come from 132.00 per tonne mid-March to today’s 154.00. The Federal Reserve signalled they will decrease their massive bond holdings at the pace of 95B a month in line with future tightening in efforts to also shrink their highest inflation in decades. We expect the cross to hold 0.7450 with further upside likely.

Exchange Rates:
The current interbank midrate is: AUDUSD 0.7480
The interbank range this week has been: AUDUSD 0.7464- 0.7658

European and US equities posted gains in Wednesday and Thursday trading boosting sentiment and taking the New Zealand Dollar (NZD) off a high of 0.6440 (1.5525) down to (0.6345) 1.5760 against the Euro (EUR) into Friday. The Eurozone sentiment indicator is still being hammered due to uncertainty in Ukraine/Russian conflict dropping 5 points to 108 in March based on expectations of 109, the reading is due to plummeting consumer confidence. Day 44 of Ukraine/Russia war sees Ukraine bracing for more Russian attacks across Donbas as they withdraw from the outskirts of Kyiv to regroup. Ukraine president Volodymyr Zelenskiy has said the new sanctions against Russia are not enough and without more measures they were susceptible to more bloody attacks. With prices around July 2017 highs and negotiations far from any peaceful ceasefire, it’s hard to not see further declines taking place in the EUR-the next resistance level is 0.6890 (1.4520) the 2014 level.

Exchange Rates
The current interbank midrate is: NZDEUR 0.6332 EURNZD 1.5792
The interbank range this week has been: NZDEUR 0.6253- 0.6436 EURNZD 1.5537- 1.5991

The English Pound (GBP) slumped to 0.5425 (1.8440) midweek against the New Zealand Dollar (NZD) clocking a January 2021 high. Over the past couple of days, the GBP has got some relief from solid UK PMI data and an upwardly revised Bank of England rate hike pricing. Hawkish Fed speak boosted big dollar mood as well pushing the crosses lower including te kiwi to 0.5285 (1.8930) in early Friday. Meanwhile, the UK office for budgets is picking UK inflation topping out at 9% this year. The Pound remains vulnerable to the war in Ukraine, with the December 2020 high of 0.5400 (1.8520) in view we expect further movement to the topside.

Exchange Rates
The current interbank midrate is: NZDGBP 0.5264 GBPNZD 1.8996
The interbank range this week has been: NZDGBP 0.5263- 0.5362 GBPNZD 1.8648- 1.8998

The New Zealand Dollar climbed to an honourable 0.7030 early week against the US Dollar (USD), the first time we have seen prices in the 0.70’s since November 2021. The kiwi extended the bull trend from the low of 0.6530 at the end of 2021 trading. However, the 70 handle broke down reversing to Fridays 0.6880 in the wake of the Federal Reserve news. The chart shows we could still see further upside in the NZD as the RBNZ ramps up interest rates in the coming months. Fed chairman Powell signalled the Federal Reserve would be raising interest rates this year from the March 2020 near zero mark in efforts to cool the hottest inflation in decades. They will shrink the size of their balance sheet by 95B per month. Consensus shows many of the fed officials would have preferred to raise the rate on March 17th by half a percent over the quarter rise. We may see as much as 6 more rises in 2022 with Powell suggesting we may see a 0.5% rise in the next May meeting could be necessary. We prefer upside moves over the next few days in the cross.

Exchange Rates
The current interbank midrate is: NZDUSD 0.6882
The interbank range this week has been: NZDUSD 0.6872- 0.7031

The Australian Dollar (AUD) has outperformed the New Zealand Dollar (NZD), the fourth straight week in a row reaching 1.0920 (0.9160) before easing back to 1.0870 (0.9200) in Friday trading. The RBA Tuesday left interest rates unchanged at 0.10% but uttered intentions of hikes over the coming months signalling signs potentially for May/June rises instead of earlier August forecasts. The AUD has been well supported by rising raw material commodities such as coal and iron ore, this trend should promote further upside in the AUD. The ascending trend line looks very stable on the chart, with a “head and shoulder” pattern well formed to take the cross to 0.9130 support. Looking ahead we have Aussie jobs numbers and key RBNZ cash rate and statement, with another rise forecast, most of this may be already priced in.

Exchange Rates:
The current interbank midrate is: NZDAUD 0.9198 AUDNZD 1.0864
The interbank range this week has been: NZDAUD 0.9154- 0.9253 AUDNZD 1.0807- 1.0924