FX News

The Euro (EUR) remained heavy leading into the weekly close against the New Zealand Dollar (NZD) with a terrible IFO (German business climate) read. The most prominent German indicator, its lowest since January 2021. Trading around the 0.6375 (1.5690) area Monday the pair clocking a July 2017 high. The war in Ukraine still keeps a solid grip over the Euro, eurozone inflation remains a problem as well with  forecasters pricing in further rises yet. Locally we have business confidence Wednesday. A retest of the October 2016 high at 0.6700 (1.4500) levels looks possible.

Current Level: 0.6279 (1.5926)
Resistance: 0.6370 (1.6100)
Support: 0.6210 (1.5700)
Last Weeks Range: 0.6228-0.6348 (1.5751-1.6054)

Range bound activity in the British Pound (GBP), New Zealand Dollar (NZD) over the previous week saw price ease slightly lower off the weekly open to 0.5265 (1.90) levels. Softer UK Retail Sales lengthened out the kiwi Friday as data showed a drop of -0.3% compared to expectations of 0.6% growth in the month of February. Bouncing off long term November 2021 resistance confirms this area may hold for a while, 0.5530 (1.8080) is the next point of strength the June 2017 high. A dovish speech overnight by (BoE) Governor Bailey after striking a cautious tone when asked if he would be raising rates again at the next central bank meeting sent the GBP lower. Bailey reiterating- uncertain outlook in Ukraine situation is causing much volatility and instability. Looking ahead we have a quiet week of data with just ANZ business confidence to publish. We expect a little downside this week in the kiwi as price reverses off recent highs.

Current Level: 0.5268 (1.8982)
Resistance: 0.5305 (1.9100)
Support: 0.5235 (1.8850)
Last Weeks Range: 0.5218-0.5294 (1.8886-1.9164)

The Australian Dollar (AUD), New Zealand Dollar cross trades around 0.9210 (1.0860) early in Tuesday sessions, the Aussie pushed higher off the weekly open from 0.9285 (1.0770) as equity markets and commodities recovered from losses, the Nasdaq up 1.3% on the day and iron ore at 146.00 from 136.00 late last week supporting an outperforming AUD across the board. The RBA is facing renewed pressures to start lifting its cash rate from spending pressures in the Federal Budget tonight. The spending should act as an additional stimulus for the economy which is facing upside to inflation already at its highest level in 5 years. Predictions are for the RBA to start raising their cash rate from June to 0.75% with risks it could happen earlier in May. On the calendar is ANZ Business Confidence Wednesday in NZ which could dampen NZD buyer mood. Staunch resistance at 0.9130 (1.0950) should hold- the long term 4 year low.

Current Level: 0.9205 (1.0851)
Resistance: 0.9285 (1.0920)
Support: 0.9160 (1.0770)
Last Weeks Range: 0.9253-0.9353 (1.0691-1.0807)

Recent form in the New Zealand Dollar (NZD) saw prices up around 0.6990 at the close of the week against the US Dollar (USD) before dropping to 0.6890 into Tuesday as a pullback in equity prices and US bond yields took hold. The 2022 bull rally still holds- the run up from late January’s 0.6530 remains intact. We would need to see a break lower through 0.6800 to see a considerable trend change. The 0.6870 level is immediate support, the kiwi is struggling to ward off further losses amid poor February job’s numbers (down 0.3%). Looking ahead we have US Unemployment data and Manufacturing Friday which will make for choppy action as it always does. We think the NZD may pullback further this week and give back recent gains.

Current Level: 0.6903
Resistance: 0.6980
Support: 0.6860
Last Weeks Range: 0.6863-0.6988

Tuesday 29/03
12am, GBP, BOE Gov Bailey Speaks

Wednesday 30/03
1pm, USD, CB Consumer Confidence
Forecast: 106.9
Previous: 110.5
1pm, NZD, ANZ Business Confidence
Previous: -51.8
9:10pm, GBP, MPC Member Broadbent Speaks

Thursday 31/03
1:15am, USD, ADP Non-Farm Employment Change
Forecast: 455K
Previous: 475K
1:30am, USD, Final GDP q/q
Forecast: 7.10%
Previous: 7.00% Read more

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