AUD/USD Conversion:

The US Dollar (USD has taken a battering in overnight trading against the Australian Dollar (AUD) with the cross reaching 0.7050 early today. It’s been carnage in the markets post Wednesday’s Fed decision when they hiked interest rates from 1.0% to 1.75% in what was seen as the biggest increase since 1994. Most punters were predicting 75 points with some at 100, most of the move already baked into the charts, however. The greenback has been spanked over the past couple of days, the “dollar index” dropping over 3.0%. Usually such a spike in rates would have sent prices lower but since Powell said the July Fed hike could be either 50 or 75 points this rocked markets based on earlier comments suggesting a solid 75 points was already locked in. Aussie job numbers were consistent with an additional 60,000 people being added to the workforce and unemployment remaining at 3.9%, this helped the Aussie push up Thursday. We suspect the cross above 0.7100 could be getting fairly toppish, if you are considering buying.

The current interbank midrate is: AUDUSD 0.7022
The interbank range this week has been: AUDUSD 0.6849- 0.7068

NZD/EUR Conversion:

Down the escalator up the lift describes this week’s movement in the Euro (EUR), New Zealand Dollar (NZD) with the kiwi softening through to 0.5935 (1.6850) midweek before bouncing back to post 0.6055 (1.6520) Friday. The ECB’s new “anti-fragmentation tool” announced this week should set the ECB up for more aggressive tightening hikes later in the year. The tool will give more certainty with predictions of a hike of 25 points in July, 50 points in September, October, and November to round off the interest rate at year end somewhere around the 1.25% area. NZ GDP first Q printed yesterday and wasn’t what we were looking for at -0.2% vs 0.3% expected, this follows +3.0% for the first quarter and confirmed the start of what everyone has been wary of – the inevitable looming recession. Up over 0.6000 this represents good buying in our book, buyers should consider.

The current interbank midrate is: NZDEUR 0.6022 EURNZD 1.6605
The interbank range this week has been: NZDEUR 0.5934- 0.6059 EURNZD 1.6504- 1.6851

NZD/GBP Conversion:

It’s been a choppy week in the British Pound (GBP), New Zealand Dollar (NZD) pair, in early Friday trading we are around 0.5155 (1.9400) levels post overnights Bank of England Policy and rate hike. We saw no real surprise from the Bank of England hiking 25 points to 1.25% as predicted with the official vote at 6-3 in favour of the hike. The GBP rising on the news but dropping back to pre-release prices. The markets were not convinced for some reason, perhaps a 50-point move may have been the better call, but the central bank looks to be staunch about not raising too hard to combat rising inflation as this could invite more recession fears of which the UK are leading the race on. With the outlook likely to be less certain the banks appetite will remain cautious of over hiking and running the economy to a standstill.

The current interbank midrate is: NZDGBP 0.5147 GBPNZD 1.9428
The interbank range this week has been: NZDGBP 0.5124- 0.5195 GBPNZD 1.9248- 1.9513

NZD/USD Conversion:

What goes down must come up. The New Zealand Dollar (NZD) recovered midweek off 0.6200 levels against the US Dollar (USD) the May 2020 low, posting 0.6395 at the close of NY this morning. NZ GDP for the March 2022 quarter was poor coming in at -0.2% instead of the expected 0.3%. This follows on from the December 3.0% confirming the economy is contracting quickly. A negative result in the second quarter will firmly place the economy in recession. The Federal Reserve raised their cash price 75 points Thursday to 1.75% pulling down bond treasury yields putting the greenback under pressure. Powell confirming the next hike in July may only be a 50 point move higher instead of the prices in 75 points also contributed to the selloff in the big dollar. Overall pressure in the cross remains to the downside all things considered. The fib 50% retracement from the recent high and low signals prices could struggle to push above 0.6400, buyers of USD should consider, especially given this Monday we were pricing under 0.6200

The current interbank midrate is: NZDUSD 0.6341
The interbank range this week has been: NZDUSD 0.6192- 0.6395

NZD/AUD Conversion:

It’s been a game of two halves in the New Zealand Dollar (NZD), Australian Dollar (AUD) cross this week with price clocking 0.8955 (1.1165) matching the November 2017 low before recovering back towards 0.9090 (1.1000) early this morning. The kiwi feared better in the wake of the federal Reserve 75-point hike announcement Thursday morning pushing back despite a poor GDP print. GDP-first quarter 2022 published at -0.2% down on expectations of 0.3% and should have weakened the NZD but had little effect. Aussie employment may have contributed to the Aussie weakness thereafter despite a rise to the employed numbers the employment rate remained unchanged at 3.9% despite consensus of a drop to 3.8%. Next week’s key data is thin on the calendar, we expect the cross to stay in its current range for a while.

The current interbank midrate is: NZDAUD 0.9029 AUDNZD 1.1061
The interbank range this week has been: NZDAUD 0.8955- 0.9070 AUDNZD 1.1025- 1.1166

FX Update: Risk Currencies Slaughtered

Market Overview

Key Points:

• Several banks expect the Federal Reserve to hike 75 points this week

• US Congress is making plans to limit US investment into Chinese companies
• Bubbling inflation threatens to deepen the global crisis with disastrous scenarios
• Crude Oil settles above 120.00
• The Ukraine agriculture minister says Ukraine has lost 25% of their arable land due to the war
• UK monthly GDP -0.3% vs 0.1% m/m predicted
• The New Zealand Institute of Economic Research is forecasting downward revised growth in NZ over the coming years
• UK plans to cancel parts of the post Brexit deal agreed with the European Union in 2019
• The US Dollar (USD) is the strongest currency this week with the Australian Dollar (AUD) and New Zealand Dollar (NZD) the weakest as risk mood deteriorates Read more

AUD/EUR (EUR/AUD) Conversion:

Commodity products and equities were down off prior highs Monday confirming a broad-based risk off flow spanning mostly from Friday’s US hot inflation read. The Euro pushed higher to 1.5050 (0.6645) early today, a fresh two week low in the pair. French voting yesterday in the first round of parliamentary elections will determine if President Macron leads for a second term; he faces a resurgence from the opposition led by Melenchon. Key data out this week comes in the form of Australian employment with the employment rate expected to tick lower to 3.8% from 3.8%. With risk sentiment dominating moves we could see a retest of the 13-week low at 0.6590 (1.5170) this week.

Current Level: 0.6660 (1.5015)
Resistance: 0.6780 (1.5270)
Support: 0.6550 (1.4750)
Last Weeks Range: 0.6648-0.6775 (1.4758-1.5040)

AUD/GBP Conversion:

The Australian Dollar (AUD) slumped to 0.5675 (1.7620) late in the week before recovering losses to close around the  0.5720 (1.7480) mark. We saw interest in the Aussie Monday to 0.5740 (1.7430) but overall risk flow put an end to any chance of the AUD gathering any momentum. Iron ore prices have dropped over the past few days as well as most commodity products which has underpinned the falls in the AUD. The Bank of England (BoE) came out and said large banks are no longer too large to fail putting consumers on the hook for potential failing institutions. The BoE official cash rate is Thursday with voting predictions of a 9-0 result to raise rates from 1.0% to 1.25%. We expect the cross to continue its recent swing lower to 0.5680 (1.7600) and lower over the week.

Current Level: 0.5714 (1.7500)
Resistance: 0.5790 (1.7780)
Support: 0.5625 (1.7270)
Last Weeks Range: 0.5672-0.5790 (1.7270-1.7628)

AUD/USD Conversion:

Risk sentiment is painting a pretty dim view of recent moves in the Australian Dollar (AUD), US Dollar (USD cross with the price reaching fresh lows at 0.6910 early this morning. Crashing through key support at 0.7000 during early Monday trading, fears of a global recession remain high on investor minds as risk products continue to show red. US inflation surprisingly rose late last week y/y to 8.6% from 8.3% and is the highest it’s been since December 1981, laughing off 8.3% expected. There was discussion that the US Inflation had topped out but as energy, fuel and food costs continue to balloon higher. Fed chairman Powell now faces the predicament of what to do next, we expect a rise of 50 points to 1.5% in their June 16th FOMC meeting and 50/50/25 interest rate moves over the following 3 reports. 0.6850 the long-range support holds concern, a breakthrough here the June 2020 level and we could see a further run lower.

Current Level: 0.6934
Resistance: 0.7050
Support: 0.6850
Last Weeks Range: 0.7037-0.7246

NZD/EUR (EUR/NZD) Conversion:

Prices in the Euro (EUR), New Zealand Dollar (NZD) reversed off the open at 0.6045 (1.6540) bouncing back towards 0.6000 (1.6660) in early Tuesday trading. It’s very much a risk off tone drifting through markets this week with equities continuing their run lower– the Nasdaq 4.20% down on the day. French voting yesterday in the first round of parliamentary elections will determine if President Macron leads for a second term, he faces an upsurge effort from the opposition spearheaded by Melenchon. NZ GDP q/q prints Thursday the key data this week on the calendar with 0.6% growth predicted for the second quarter 2022 down from 3.0% in the first. The kiwi could struggle this week to gather any pace.

Current Level: 0.6020 (1.6611)
Resistance: 0.6110 (1.6840)
Support: 0.5940 (1.6370)
Last Weeks Range: 0.5976-0.6098 (1.6398-1.6733)