Monday August 21
1:15pm CNY 1-y Loan Prime Rate 3.40% 3.55%
Wednesday August 23
7:15pm EUR French Flash Manufacturing PMI 45.2 45.1
7:15pm EUR French Flash Services PMI 47.5 47.1
7:30pm EUR German Flash Manufacturing PMI 38.6 38.8
7:30pm EUR German Flash Services PMI 51.5 52.3
8:30pm GBP Flash Manufacturing PMI 45.1 45.3
8:30pm GBP Flash Services PMI 50.9 51.5
Thursday August 24
1:45am USD Flash Manufacturing PMI 48.9 49
1:45am USD Flash Services PMI 52.4 52.3 Read more
Australian unemployment clicked higher to 3.7% from June’s 3.5%, the Chinese economic outlook has worsened, and the RBA were dovish leaning all helped to push the Australian Dollar (AUD) to new lows against the Euro (EUR) this morning clocking 0.5860 (1.7060) a 3 May 2020 level. German economic sentiment released slightly better than expected at -12.3 vs -15.0 which is bizarre as the economic situation has worsened lately. We expect the Euro has further to run before any change in momentum is seen.
The current interbank midrate is: AUDEUR 0.5897 EURAUD 1.6957
The interbank range this week has been: AUDEUR 0.5860- 0.5974 EURAUD 1.6738- 1.7063
The English Pound (GBP) continued to dominate moves across the main board of currencies, extending its dominance over the Australian Dollar (AUD) in a big way this week. The biggest weekly move in a year by the cross sees it trading at 0.5015 (1.9950) this morning compared to the weekly open price of 0.5130 (1.9490). Great for sellers of GBP- not so flash if you are buying. A bumper UK jobs earning number followed by an improving inflation read – 6.8% y/y in July down from June’s 7.9% won’t be enough for the Bank of England who will almost certainly bump their cash rate 50 points next month to 5.75%. There isn’t much standing in the way of the cross testing the April 2020 level of 0.4950 (2.0200) over the following days.
The current interbank midrate is: AUDGBP 0.5031 GBPAUD 1.9876
The interbank range this week has been: AUDGBP 0.5007- 0.5130 GBPAUD 1.9487- 1.9966
The US Dollar (USD) has lengthened out its hold over the Australian Dollar (AUD) to 0.6400 levels this morning earlier yesterday reaching 0.6365. The cross has cleared all remaining support levels of late with the remaining significant long-term support remaining at 0.6140. A mix of factors hasn’t helped the Aussie of late- “risk” markets were softer overnight, Chinese outlook fears and a dovish RBA all contributing. On the plus side Australian unemployment jumped from 3.5% to 3.7% strengthening the case for the RBA to hold rates for some time ahead. Meanwhile the Fed minutes wash up confirmed the Federal Reserve still sees inflation risks ahead and a potential need to raise rates if required. Sell the dip, buy the rip.
The current interbank midrate is: AUDUSD 0.6419
The interbank range this week has been: AUDUSD 0.6363- 0.6520
As we suggested earlier in the week- The New Zealand Dollar (NZD) has notched up another week of declines with price reaching 0.5435 (1.8400) against the Euro (EUR). The RBNZ left the cash rate on hold at 5.50% with hawkish rhetoric suggesting they could yet hike depending on how data flows in. Also of note is the broad based “risk flow” hampering the NZD with equity markets all softening. The Eurozone grew by a modest 0.3% in the second quarter of 2023, slightly up on the first quarter’s 0.2% with Ireland making waves with their solid 3.3% the largest in the eurozone. Buy the EUR on any spike.
The current interbank midrate is: NZDEUR 0.5451 EURNZD 1.8345
The interbank range this week has been: NZDEUR 0.5435- 0.5493 EURNZD 1.8202- 1.8398
Inflation in the UK improved to 6.8% y/y down from 7.9% in June coming in bang on expectations. It’s good news for the Bank of England (BoE) however they still have work to do in order to bring down inflation further. The central bank should raise rates next month 50 basis points instead of the earlier 0.25% consensus. The New Zealand Dollar (NZD) extended its bear run over the week to clock 0.4870 (2.1530) breaking past March 2020 support, the next support is 0.4140 (2.4170), we think it will be one way traffic for a while yet.
The current interbank midrate is: NZDGBP 0.4652 GBPNZD 2.1496
The interbank range this week has been: NZDGBP 0.4644- 0.4724 GBPNZD 2.1168- 2.1533
As we said earlier the Australian Dollar (AUD) came under pressure, but it wasn’t until late Wednesday we saw a shift off 0.9210 (1.0860) levels back to 0.9235 (1.0830). NZ Retail Sales disappointed in the June quarter coming in at -1.0% vs -0.4% the 3rd consecutive decline representing consumers leaving money in their pocket, the biggest contributor being food and beverage with the sector struggling. On the whole, the pair remains well within recent ranges. Next week’s economic docket looks super thin, more of the same looks to be the likely theme.
The current interbank midrate is: NZDAUD 0.9225 AUDNZD 1.0833
The interbank range this week has been: NZDAUD 0.9192- 0.9266 AUDNZD 1.0792- 1.0879
Different week- same result, in the New Zealand Dollar (NZD), US Dollar (USD) cross with the kiwi slipping again to fresh lows around 0.5930 levels. Well under the 0.6000 support line now it’s hard to see the NZD bouncing back with any gusto. The Reserve Bank of New Zealand confirmed they are happy with the current cash rate at 5.50% which has been constraining spending and inflation pressures. Fed minutes suggested they are hanging off rises in unemployment and slower growth in order to bring down inflation to target levels with a recession now on the cards later this year. On the chart the NZD looks into the abyss all the way to 0.5550.
The current interbank midrate is: NZDUSD 0.5936
The interbank range this week has been: NZDUSD 0.5903- 0.5997
FX Update
Key Points:
The New Zealand Dollar (NZD) continued its downward spiral late last week reaching 0.5980 closing below key support at the big figure- 0.6000 against the US Dollar (USD). Monday’s action has extended moves to the downside clocking 0.5950 in early Tuesday. To be honest, the kiwi looks “down for the count” at the moment trading into thin air through 0.6000 was a major signal we could see bigger moves into the 0.50’s. It’s a busy week of releases for the pair with a slew of data to publish. The RBNZ official cash rate is expected to hold rates at 5.50% followed by Fed minutes Thursday. At some point the NZD will bounce higher, buyers of USD should grab the spikes.
Current Level: 0.5974
Resistance: 0.6360
Support: 0.5930
Last Weeks Range: 0.5974 – 0.6117