FX News

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

Wild shifts in currencies has seen the Australian Dollar (AUD), Euro (EUR) pair come off a weekly open of 0.6745 (1.4830) and travel to 0.6870 (1.4550) late yesterday. This marks a July 2017 high in the cross. Rallying commodity prices and solid local data supported the Aussie although risk sentiment in the market has been extremely negative. The Euro is under more pressure as the Russia-Ukraine crisis compromises growth forecasts in the Eurozone as the ECB is forced to hold fire on potential rate hikes although record inflation continues to rise. Rising gas prices look very much like we could see an energy shock recession. A reversal rally overnight took the cross back through the weekly open to 0.6715 (1.4890). The pair remains sensitive to isolated shifts in risk tone. Read more

The Australian Dollar (AUD) rose to a 4 November 2021 High yesterday against the US Dollar (USD) continuing its risk rally channel run from 0.6980 in late January to 0.7440. Commodity  prices along with Gold, Silver and Crude all backed away from recent highs during overnight trading taking Aussie support with it. The AUD/USD cross trading back at 0.7315 early this morning. Friday’s Non-Farm Payroll release came in better than expected at 678k vs 407k predicted the biggest monthly gain since July 2021, assisting to push the pair higher. Unemployment also published lower at 3.8% in February compared to 4.0% in January. This result has boosted chances of a Fed move sooner than later with interest rates hike action. Geopolitical woes in the Russian/Ukraine war are creating extremely large moves in currencies and will continue to do so. Markets await results from third round negotiation talks and Russian energy sanctions. Support in the cross is at 0.7280.

Current Level: 0.7328
Resistance: 0.7430
Support: 0.7280
Last Weeks Range: 0.7163-0.7379

Market volatility caused by uncertainty in the Russian/Ukraine crisis has caused the New Zealand Dollar (NZD) to clock 0.6395 (1.5640) late Monday against the Euro (EUR) in what turned out to be one of the biggest two day moves we have seen in years. From Friday’s open at 0.6110 (1.6370) it has been all NZD strength. Blink and you will miss it- as fast as the kiwi posted July 2017 levels it backtracked to 0.6270 (1.5950) as I write with risk sentiment turning deeply pessimistic, stocks down over 2%. A risk off tone could continue into tomorrow as the economic consequences in the Eurozone weigh heavy on further NZD rallies. The ECB refinance rate and statement is Friday with the ECB having some tough decisions to consider with tapering QE amid uncertainty. Read more