FX News

FX News

FX Update: Big dollar on struggle street

Market Overview

Key Points:

• After last week’s drop in US inflation the US Dollar has extended declines.
• The New Zealand economy reported a rise in exports in October of 5.4B up from September’s 4.77B
• ECB’s Villeroy has suggested the ECB has been too aggressive with their policy and they should be more “modest” with future policy. The latest developments in Israel/Gaza suggest should significantly change the lower inflation forecast.
• Gold prices retest the 2000 area, however with a weaker USD it may deepen before making a charge higher.
• Thanksgiving holiday week (Friday) should see a drop in trading towards the end of the week with increased volatility.
• The Australian Dollar (AUD) has been the strongest currency over the month of November while the US Dollar (USD) has been the worst performer.

FX News

Calendar of Economic Releases

Tuesday November 21
7:45am GBP BOE Gov Bailey Speaks
12:00pm AUD RBA Gov Bullock Speaks
1:30pm AUD Monetary Policy Meeting Minutes

Wednesday November 22
2:30am CAD CPI m/m
Forecast 0.20%
Previous -0.10%
2:30am CAD Median CPI y/y
Forecast 3.60%
Previous 3.80%
2:30am CAD Trimmed CPI y/y
Forecast 3.60%
Previous 3.70%
8:00am USD FOMC Meeting Minutes
9:35pm AUD RBA Gov Bullock Speaks Read more

FX News

AUD/USD Transfer

US inflation data surprised markets early Wednesday, the report showing yearly inflation has fallen from 3.7% to 3.2% with energy, utility and gas prices all declining in the month of September. This news confirms the Fed will most likely be taking off the table a hike at their December policy meeting. Treasury yields plunged and the US Dollar (USD) was heavily sold off across the board. Against the Aussie price moved to just under 0.6550 from around 0.6380. Meanwhile Aussie unemployment moved higher off 3.6% to 3.7% beating out expectations of 3.6% suggesting the RBA may have work still to do. Risk sentiment remains tender with the conflicts in Gaza, we don’t expect the AUD to move up past current levels over the medium term with overall bias still to the downside.

The current interbank midrate is: AUDUSD 0.6470

The interbank range this week has been: AUDUSD 0.6352- 0.6542

FX News

AUD/GBP Transfer

The British Pound (GBP) weakened off 1.9320 (0.5175) against the Australian Dollar (AUD) after UK inflation came in lower than prediction, investors exiting the GBP en masse, the cross reaching 1.9020 (0.5260). UK inflation printed at 4.6% in October y/y coming down from 6.7% as energy prices fell and the UK economy stares at the real possibility they may fall into recession in the next few months. Meanwhile Australian unemployment rose to 3.7% from 3.6% as the number of employed jumped by 55,000 after expectations of a rise of just 22,000. The news sent the AUD lower with price retracing to 1.9220 (0.5200). We continue to expect the GBP to retest 1.9330 (0.5175) – the 3-month low.

 

The current interbank midrate is: AUDGBP 0.5210 GBPAUD 1.9193

The interbank range this week has been: AUDGBP 0.5175- 0.5250 GBPAUD 1.9047- 1.9323

 

FX News

NZD/USD Transfer

The New Zealand Dollar (NZD) broke back into the 0.60’s midweek against the US Dollar (USD) after 4 weeks of trading in the high 50’s. US annual Inflation data came in at 3.2% y/y dropping from 3.7% in September, below market forecasts of 3.3%. The drives were gas/energy and utility prices which fell well over 5%. This has raised questions on whether the Federal Reserve are done with rate hikes. Markets have moved in forecasts of when the Fed could start cutting rates from July 2024 to June post the CPI report. Back home- credit card spending cooled as well as risk sentiment, the kiwi Friday is back under 0.6000 at 0.5965 unable to hold above key 0.6000. Still good buying of USD at these levels.

The current interbank midrate is: NZDUSD 0.5965

The interbank range this week has been: NZDUSD 0.5864- 0.6054

FX News

NZD/GBP Transfer

The British Pound (GBP) reached the triple bottom support at 2.0930 (0.4780) midweek against the New Zealand Dollar (NZD) but couldn’t hold this area cutting lower through to 2.0600 (0.4855) – another key “Fib” level as UK CPI y/y published. UK inflation dropped below the forecast of 6.7% to 4.6% reinforcing rhetoric that the Bank of England (BoE) most likely won’t raise rates again. Markets convinced the central bank are done raising rates and forecasts turn to rate cuts predicted to begin around June 2024. Over the past few hours price has receded to 2.0780 (0.4812) as risk flow deteriorates. End of week predictions suggest we could retest the 2.0950 (0.4775) zone again.

The current interbank midrate is: NZDGBP 0.4803 GBPNZD 2.0820

The interbank range this week has been: NZDGBP 0.4768- 0.4857 GBPNZD 2.0588- 2.0973

FX News

NZD/AUD Transfer

Investors targeted the Australian Dollar (AUD) post Australian job’s data Thursday. The Aussie rose from 1.0770 (0.9285) against the New Zealand Dollar (NZD) to reach 1.0840 (0.9225) mid-morning Friday with figures showing unemployment ticked up from 3.6% to 3.7%. The news had punters contemplating prospects of further tightening by the RBA at their next meeting in December. With precious metals having a good run including Iron Ore up at 133.00 per ton we expected the AUD to rally harder than it did. We may see catch-up AUD buying over the coming days, certainly a retest of 0.9140 (1.0940) could be achievable.

The current interbank midrate is: NZDAUD 0.9218 AUDNZD 1.0838

The interbank range this week has been: NZDAUD 0.9200- 0.9281 AUDNZD 1.0774- 1.0869

 

 

 

FX News

EURO/AUD Transfer

How wrong we were post the RBA release last week. Usually, a hike to rates creates buyer interest in the corresponding currency. As the RBA hiked as predicted to 4.35% we saw a small rise in the Australian Dollar (AUD) but this spike wasn’t to last, the currency falling away sharply to end the week around 0.5950 (1.6800) levels. Who knew. The cross tested prior support at 0.5940 (1.6840) before recovering back to 0.5975 (1.6740) this morning. Australian job numbers print later today with forecasts the unemployment rate to rise from 3.6%.

Current Level: 1.6784
Resistance: 1.7010
Support: 1.6500
Last Weeks Range: 1.6452 – 1.6830

FX News

AUD/EURO Transfer

How wrong we were post the RBA release last week. Usually, a hike to rates creates buyer interest in the corresponding currency. As the RBA hiked as predicted to 4.35% we saw a small rise in the Australian Dollar (AUD) but this spike wasn’t to last, the currency falling away sharply to end the week around 0.5950 (1.6800) levels. Who knew. The cross tested prior support at 0.5940 (1.6840) before recovering back to 0.5975 (1.6740) this morning. Australian job numbers print later today with forecasts the unemployment rate to rise from 3.6%.

Current Level: 0.5958
Resistance: 0.6060
Support: 0.5880
Last Weeks Range: 0.6452 – 0.6830

FX News

GBP/AUD Transfer

UK GDP came in at 0.6% y/y as expected, monthly 0.2% up on the 0.1% markets were expecting confirming the UK economy has flatlined. The good news- the economy hasn’t fallen into a recession with negative growth, but higher borrowing costs look to be hitting where it hurts and will continue to bite for some time as the Bank of England keeps rates high for an extended period. The British Pound (GBP) rose to 1.9220 (0.5205) at the weekly close and has moderately extended this move Monday to 1.9240 (0.5195) against the Australian Dollar (AUD) as markets await this week’s key UK inflation release. Expectations are for a drop from 6.7% to 4.8% y/y which could rally the Pound.

Current Level: 1.9260
Resistance: 1.9400
Support: 1.8995
Last Weeks Range: 1.8975 – 1.9237