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NZD/USD Transfer

Inflation data will be key this week to determining the next move by the New Zealand Dollar (NZD), US Dollar (USD). With the kiwi travelling close to long term lows recently around the 0.6030 zone it’s an important week, will the NZD finally fall below pivotal 0.6000 or maintain enough buyer support and rally back to levels around 0.6400 seen a couple of weeks back. Certainly, NZ inflation expectations for the 3rd quarter could determine if we see a last-ditch hike by the RBNZ to bring down inflation. US CPI y/y is predicted to rise to 3.3% from 3.0%, the first time since June 2022, which may decide if the US economy falls into recession.

Current Level: 0.6105
Resistance: 0.6390
Support: 0.6065
Last Weeks Range: 0.6058 – 0.6224

FX News

FX Update: Risk Holding Up

Market Overview

Key Points:
• Non-Farm Payroll (NFP) printed poorly at 187,000 compared to 205,000 putting the US Dollar under pressure.
• The Bank of England (BoE) may need to raise rates again, we see a 70% chance the Central Bank will hike 25 points at their Sep 21 meeting.
• Germany’s economic situation is worsening as they face industrial production declines, energy rises, and a lack of consumer spending.
• The Fed have not ruled out the possibility of cutting rates in 2024
• UK House prices fell 0.3% in July vs 0.0%
• The Euro (EUR) has been the strongest currency in the month of August while the Australian Dollar (AUD) is the worst performer.

Major Announcements last week:
• Chinese July Manufacturing 49.3 vs 48.9 forecast
• RBA maintain cash rate at 4.10%
• NZ Unemployment Rate climbs to 3.6% from 3.4% in June
• Bank of England (BoE) hike 25 points to 5.25%
• Canadian Unemployment remains unchanged at 5.5%
• Non-Farm Payroll prints 187k vs 205k expected

FX News

NZD/USD Transfer

The New Zealand Dollar (NZD) slumped to a 5-week low to 0.6060 against the US Dollar (USD) this week. Friday the kiwi has started a recovery of sorts trading back to 0.6077 as I write but with global headwinds it may struggle to gain much momentum to the north. The NZ job market eased in the second quarter with job participation hitting an all-time high of 72.4% with more than 3M people now employed in the workforce. The unemployment rate rose slightly from 3.4% in the first quarter to 3.6 in the second, the question remains- will this be enough to force the hand of the RBNZ to hold interest rates at their next meeting on August 16th- we suspect not. Tonight’s Non-Farm Payroll (NFP) number is predicted to come in light reflecting an easing to the job’s market. Long term support in the cross is around the 0.6040 to 0.6000 range, recent sentiment suggests this area won’t hold.

The current interbank midrate is: NZDUSD 0.6080

The interbank range this week has been: NZDUSD 0.6061- 0.6226

FX News

AUD/USD Transfer

The Australian Dollar (AUD) fell to a 9-week low against the US Dollar (USD) Thursday extending recent losses to 0.6510. The US 10-year treasury bond yield was up 11 points to 4.19% and nears the October 2022 high. This in turn has seen a selloff in equity markets in August with the capacity to deepen. Not good for risk currencies in the near to medium term. Earlier the Reserve Bank of Australia (RBA) left interest rates on hold Tuesday at 4.10% the central bank suggesting they weren’t done yet dependent on incoming data, the AUD backtracking post the release. Non-Farm Payroll tonight with expectation of a mixed result and a slowdown of jobs data.

The current interbank midrate is: AUDUSD 0.6557

The interbank range this week has been: AUDUSD 0.6514- 0.6739

FX News

AUD/GBP Transfer

Our predictions were correct with the British Pound (GBP) pushing higher from Tuesday’s 0.5240 (1.9080) to reach 0.5140 (1.9460) in early Friday trading. The lowest level since April 2020. The BoE signalled they are close to reaching a top in this tightening cycle later this year but highlighting further persistent pressures remain with taming inflation, consumer spending and strong wages. Earlier the Bank of Australia surprised markets by holding their cash rate at 4.10% against expectation of a hike, maintaining their forward guidance of further tightening required. For now, the Aussie looks down for the count, the worst performing main board currency.

The current interbank midrate is: AUDGBP 0.5157 GBPAUD 1.9391

The interbank range this week has been: AUDGBP 0.5136- 0.5242 GBPAUD 1.9072- 1.9469

FX News

NZD/GBP Transfer

The New Zealand Dollar (NZD) extended midweek losses against the British Pound (GBP) reaching fresh lows around 0.4775 (2.0950) marking a 28-month level in the cross. The Bank of England (BoE) hiked their interest rate 25 points overnight as widely predicted voting 6-3 in favour. The central bank saying they will need to hike again later this year with inflation projections this year still exceedingly high. Earlier in the week NZ job’s data released with the participation rate hitting an all-time high and the unemployment rate clicking higher to 3.6%, up from 3.4% in quarter one. The kiwi looks poorly with further declines on the horizon expected.

The current interbank midrate is: NZDGBP 0.4782 GBPNZD 2.0911

The interbank range this week has been: NZDGBP 0.4771- 0.4844 GBPNZD 2.0643- 2.0959

FX News

NZD/AUD Transfer

The New Zealand Dollar (NZD) has continued to move higher throughout the week reaching 0.9325 (1.0725) against the Australian Dollar (AUD) but it hasn’t been all one-way traffic. Although the cross remains within big picture ranges, movement over the week has certainly not been stagnant. The RBA surprised us by leaving their cash rate unchanged at 4.1% in a hawkish release amid expectation they will raise again down the track. NZ Job’s numbers reached an all-time high with 72.4% of eligible people in the workforce. However, the unemployment rate did jump to 3.6% from 3.45 in the June quarter. This may not be enough for the RBNZ to hold rates at their August 16 meeting, but we should get a better signal when NZ inflation expectations are released on Wednesday. We really do need a big-ticket risk event to shift the NZD/AUD cross out of its long-term range.

The current interbank midrate is: NZDAUD 0.9271 AUDNZD 1.0783

The interbank range this week has been: NZDAUD 0.9231- 0.9318 AUDNZD 1.0732- 1.0832

FX News

Key Points This Week

FX Update

Key Points:

Australian Manufacturing in July 49.6 vs 48.2 expected, with pressures over the past few months easing.

NZ Building Permits for June +3.5% m/m prior -2.2% which is positive, however the number is still down 20% from the June 22 figure.

Chinese media are taking pot shots at Australia again warning of tight ties with the US after the two countries expand military operations together.

US earnings season continues this week with Apple, Amazon and Uber up this week.

German Retail Sales -0.8% vs 0.2% expected in June highlighting poor consumer spending.

July Chinese manufacturing data index (49.3) remains in contraction- the 4th straight month.

The Japanese Yen (JPY) is the strongest performer over the month of July with the US Dollar (USD) the worst performer.