FX News

The Australian Dollar (AUD), Euro (EUR) pair turned sharply Thursday off 0.6600 (1.5160) the low of the week as optimism waned in the Ukraine-Russian talks failed to produce progress. European Equity indices reversed a massive 5-7% on headline news. The European Central Bank said it would phase out bond buying sooner than predicted by September, carving a path for interest rate hikes later the year. The problem the ECB faces is possible stagnation as the ECB concentrates on high inflation at the detriment of growth. Mid-morning prices are still supporting the Aussie as the cross travels through 0.6705 (1.4915), we could see a possible retest of 0.6755 (1.4800) but this area should hold.

Exchange Rates:
The current interbank midrate is: AUDEUR 0.6682 EURAUD 1.4965
The interbank range this week has been: AUDEUR 0.6598- 0.6870 EURAUD 1.4554- 1.5156

After a midweek dip to the 0.7250 area in the US Dollar (USD), Australian Dollar (AUD) pair price rebounded higher to this morning’s 0.7360 as the Aussie carves out gains as risk appetite turns sour and the greenback weakens. Usually risk currencies such as the NZD and CAD get squeezed lower, but we are in a war and markets are behaving peculiar to say the least. The Fed will likely dial back its tightening schedule this year as it juggles rising inflation and the economic fallout of the Russian/Ukraine war with the Fed hiking possibly 4-5 times. We expect the Fed to raise rates at next week’s meeting by 0.25%. RBA’s Lowe says they may increase their cash rate this year, data dependent. We think the AUD has more legs and could retest the early week high around 0.7440

Exchange Rates
The current interbank midrate is: AUDUSD 0.7358
The interbank range this week has been: AUDUSD 0.7244- 0.7440

The English Pound (GBP) showed a little resilience midweek pushing back agst the New Zealand Dollar to 0.5180 (1.9310) before dropping on risk improvement, the pair reaching 0.5250 (1.9050) into Friday trading. This move extends the 5 week move from 0.4880 (2.050), 3rd of Feb high. Great Britain is said to phase out buying of Russian crude imports by the end of 2022 and is also considering banning natural gas as well as it disciplines Russia over the invasion of Ukraine. This equates to around 4% of imports. With Oil prices expected to rise in the region to over $240.00 per barrel this will have a massive economic shock on UK citizens with petrol prices already clocking 1.80 per litre. Massive long-term resistance on the chart is 0.5280 (1.8940) the 1 Jan 2020 high, a push past here and it’s all on. Key data next week will be in the form of NZ quarterly GDP and UK rate and monetary statement. Projections are for the bank of England to raise rates to 1.5% by the middle of 2023

Exchange Rates
The current interbank midrate is: NZDGBP 0.5244 GBPNZD 1.9069
The interbank range this week has been: NZDGBP 0.5178- 0.5253 GBPNZD 1.9036- 1.9311

The British Pound (GBP) made a valiant effort to pull back from recent losses Wednesday, posting 0.5540 (1.8060) before Aussie buyers stepped in extending moves to a fresh high of 0.5615 (1.7805) early Friday. Reduces panic around the Russia Ukraine crisis rallied risk currencies overnight with RBA governor Lowe coming out with hawkish comments assisting. UK is said to phase out purchases of Russian Oil imports by the end of this year and is also considering banning natural gas as well as it disciplines Russia over the invasion of Ukraine. This equates to around 4% of UK imports. With Oil prices expected to rise in the region to over $240.00 per barrel this will have a massive economic shock on UK citizens with petrol prices already over GBP 1.80 per litre. Looking ahead we have Aussie employment figures next week and Bank of England rate and statement.

Exchange Rates
The current interbank midrate is: AUDGBP 0.5616 GBPAUD 1.7806
The interbank range this week has been: AUDGBP 0.5532- 0.5637 GBPAUD 1.7739- 1.8074

The New Zealand Dollar (NZD), Australian Dollar (AUD) pair stuck within recent ranges over the week with a short stay at 0.9390 (1.0650) before falling back towards 0.9330 (1.0720) style levels. Iron Ore hit 156.50 per tonne and commodities posted gains supporting the Aussie. RBA’s Lowe came out hawkish suggesting a rate rise was possibly on the cards later in the year based on inflation sustainability within the target range of 2-3%. Raising rates too early could jeopardise obtaining full employment. Next week’s NZ quarterly GDP and Aussie employment numbers will be our focus with both predicting to report decent results. The AUD could have the edge over the NZD into the close.

Exchange Rates:
The current interbank midrate is: NZDAUD 0.9337 AUDNZD 1.0704
The interbank range this week has been: NZDAUD 0.9287- 0.9392 AUDNZD 1.0647- 1.0767

The New Zealand Dollar (NZD) dropped to 0.6165 (1.6220) late Thursday against the Euro (EUR) on risk optimism. Ukraine-Russian talks failed to bring any progress on a ceasefire and the European Central Bank said it would phase out bond buying sooner than expected, paving the way for interest rate hikes later in the year. The problem with this is it brings up the notion of a challenging time for the ECB to avoid possible stagnation. The Euro sold off on the headline to 0.6255 (1.5985) early this morning. The ECB is more focused on higher inflation rather than slowing economic growth it seems. Pressure in the pair is swayed to the topside for now but things can change very quickly in this changing market.

Exchange Rates:
The current interbank midrate is: NZDEUR 0.6236 EURNZD 1.6035
The interbank range this week has been: NZDEUR 0.6167- 0.6396 EURNZD 1.5634- 1.6215

Fickle markets over the last few days of trading has proved again that anything can and will happen in currency markets. As the New Zealand Dollar (NZD) came off 0.6795 midweek pushing higher to early Friday prices around 0.6870 we pondered why. US Equity markets are down over 0.50% overnight as well as European stocks 5-7%, poor risk sentiment should have signalled underperformance from the NZD- not the case. The US Fed will most likely dial back its tightening policy this year as it struggles to come to terms with rising inflation and the economic effects of the Russian-Ukraine war. Cracks in world globalisation could last a long time as US and western allies ditch Russian trade agreements, certainly the scaling back of crude, coal and gas could have long huge effects. NZD looks in the mood to track higher into the weekly close.

Exchange Rates:
The current interbank midrate is: NZDUSD 0.6869
The interbank range this week has been: NZDUSD 0.6795- 0.6924