currency

The ECB led the way on interest rate cuts, among the major world Central Banks, although the Swedish Riksbank did begin the cycle first. The ECB has been under immense pressure as recession engulfs the European economies, especially manufacturing in the engine room of Europe, Germany. The rate cuts were welcomed and allowed the cross rate to the NZD to rise to above 0.5700. The differential is contracting, as the RBNZ joins the party, and the cross rate is trading around 0.5550.

Current Level: 0.5560
Support: 0.5500
Resistance: 0.5650
Last week’s range: 0.5520- 0.5560

The Bank of England cut rates at the beginning of August, following the election of the new Labour Government. This was an impediment to the GBP initially, but as other Central Banks cut rates, the cross rate has settled around 0.4685. The Bank of England and the RBNZ are in ‘sync’, in the interest rate cycle, so expect fairly stable cross rates. The provison is inflation and any re-emergence in inflation, may cause a pause in rate cuts.

Current Level: 2.1194
Resistance: 2.1505
Support: 2.1050
Last Weeks Range: 2.1200- 2.1335

The Bank of England cut rates at the beginning of August, following the election of the new Labour Government. This was an impediment to the GBP initially, but as other Central Banks cut rates, the cross rate has settled around 0.4685. The Bank of England and the RBNZ are in ‘sync’, in the interest rate cycle, so expect fairly stable cross rates. The provison is inflation and any re-emergence in inflation, may cause a pause in rate cuts.

Current Level: 0.4685
Resistance: 0.4750
Support: 0.4650
Last Weeks Range: 0.4665- 0.4700

The cross-rate reached highs of 0.9450 late in February 2024, before the ‘dovish’ RBNZ statements and their last interest rate decision. The RBNZ surprise rate cut in August sent the cross rate spiralling lower, dipping below 0.9000 at the beginning of August. RBA has shown no signs of rate cuts, but the NZD has made a recovery, to trade back above 0.9150. The interest rate differential may grow, so the cross rate will surely have some downside risk.

Current Level: 1.0946
Resistance: 1.0990
Support: 1.0810
Last Weeks Range: 1.0940 – 1.0970

The cross-rate reached highs of 0.9450 late in February 2024, before the ‘dovish’ RBNZ statements and their last interest rate decision. The RBNZ surprise rate cut in August sent the cross rate spiralling lower, dipping below 0.9000 at the beginning of August. RBA has shown no signs of rate cuts, but the NZD has made a recovery, to trade back above 0.9150. The interest rate differential may grow, so the cross rate will surely have some downside risk.

Current Level: 0.9135
Resistance: 0.9250
Support: 0.9100
Last Weeks Range: 0.9090 – 0.9140

The NZD hit lows for the year of 0.5880 towards the end of July, but dovish Central Banks in Europe and the US changed the differential narrative, allowing the NZD to begin to recover into August. The RBNZ surprised many in August, with a rate cut, and this sent the NZD tumbling lower mid-August. The ECB and Bank of England have led the way, with rate cuts, and the Federal Reserve has announced they will also join the party, in a welcomed speech from Fed Chairman Powell at the Jackson Hole Symposium. It has been gaining ever since, as market sentiment surges and equity markets approach record levels, once again.

Current Level: 0.6220
Support: 0.6200
Resistance: 0.6300
Last week’s range: 0.6125- 0.6225

The New Zealand Dollar (NZD) bull run ended abruptly Wednesday against the US Dollar (USD) as risk markets turned. Equity markets are all off highs as prices in the cross retrace from 0.6175 the early June high to 0.6120 into Friday. The Fed have said they wouldn’t look at rate reductions until they had confidence in “sustainable” inflation towards their 2% target. Also on concern is the weakening jobs market and recession fears. Powell speaks at the Jackson Hole event later today and should confirm a pessimistic view of things to come. Topside moves by the kiwi could be tough with massive resistance at 0.6200.

The current interbank midrate is: NZDUSD 0.6144

The interbank range this week has been: NZDUSD 0.6025- 0.6177

The New Zealand Dollar (NZD) has edged higher over the week through 0.9150 levels into Friday against the Australian Dollar (AUD) reaching 0.9168 (1.0910) last week’s high. As we speculated the midweek Aussie buzz ended with pull backs in equity markets and poor local data leading declines, however with the hawkish RBA stance reiterated in this week’s central bank minutes we should see the AUD improve in the midterm. NZ Retail Sales this morning came in at -1.2% slightly worse than expected, the kiwi unmoved over the release. On the economic docket next week, we have Australian CPI y/y which could tick marginally lower from 3.8%

The current interbank midrate is: NZDAUD 0.9159 AUDNZD 1.0913

The interbank range this week has been: NZDAUD 0.9064- 0.9168 AUDNZD 1.0907- 1.1032