FX News

Risk currencies took a hiding Friday off the back of poor US Jobs data, the New Zealand Dollar (NZD) retracing from 0.6250 levels against the US Dollar (USD) to close out the week around 0.6150. Monday action took the kiwi lower to 0.6120 where it sits early in the Tuesday session. Punters are bracing for this week’s US Inflation report for hints that the US Federal Reserve could cut rates 25 or 50 points at next week’s meeting. Last week’s Non-Farm Payroll report showed unemployment fell from 4.3% to 4.2% paring back odds of a 50-point cut perhaps. Pressure remains to the downside for the NZD this week.

Current Level: 0.6134
Support: 0.6100
Resistance: 0.6200
Last week’s range: 0.6154- 0.6253

The ECB meets again to once again decide interest rate/monetary policy for the Eurozone, this coming week. They may well go ahead and make a further rate cut, as stimulus, and because of the positive reaction to the last rate cut. Inflation remains subdued, following the easing in monetary policy, while the EUR actually rallied. The cross may suffer some downside this time around.

The current interbank midrate is: AUDEUR .6065 EURAUD 1.6485

The interbank range this week has been: AUDEUR .6050 – .6145 EURAUD 1.6290 – 1.6520

The cross rate with the GBP remains fairly stable and this is likely to continue, into the coming week. The UK releases a slew of important economic data this week, including Trade, GDP Growth and Employment. These will be the focus to judge the performance of the British economy, which is showing ‘green-shoots’ of recovery.

The current interbank midrate is: NZDGBP .4725 GBPNZD 2.1165

The interbank range this week has been: NZDGBP .4700 – .4745 GBPNZD 2.1030 – 2.1250

The EUR has performed remarkably well recently, despite rate cuts from the ECB. The ECB meet again this coming week and may well offer further rate cuts, to the markets. This would ordinarily add downward pressure to the EUR, but it appears the added stimulation to a recessionary European economy, offers a balance.

The current interbank midrate is: NZDEUR .5600 EURNZD 1.7860

The interbank range this week has been: NZDEUR .5560 – .5610 EURNZD 1.7713 – 1.7927

The NZD/AUD cross rate has pushed back to 0.9200, supported by continued strong performance of the NZD. The RBA has warned that, ‘interest rates will remain elevated at these high levels for longer to combat stubborn inflation’, lending support to the AUD. The quandary the RBA finds itself in, is economic conditions remain tough in Australia, as GDP growth weakens to levels not seen since the 1990’s. The high interest rates and elevated inflation only add to pressure on the consumer.

The current interbank midrate is: NZDAUD .9220 AUDNZD 1.0820

The interbank range this week has been: NZDAUD .9165 – .9240 AUDNZD 1.0815 – 1.0905

The NZD looks to consolidate above 0.6200, supported by a weaker reserve currency, which was undermined by a weaker than expected US labour market. The major US labour market reports so far this week, Jolts/ADP/Challenger, all point to further weakness in the labour market and threats of recessionary conditions prevailing in the USA. This will add pressure to the Fed, to begin to cut rates, at their upcoming meeting and perhaps by 50 basis points. This will add further support to commodity currencies.

The current interbank midrate is: NZDUSD .6220

The interbank range this week has been: NZDUSD .6130 – .6240