currency

The British Pound (GBP) rallied to 2.0810 (0.4805) levels midweek against the New Zealand Dollar (NZD) after NZ inflation expectations came in at 2.5% weakening the NZD. UK inflation was unchanged at 4.0% after forecasting suggested this would come in higher at 4.1%. This is welcome news for the Bank of England. It’s well within their 2.0% forecast over the coming months. This should give way to cuts on the horizon. Energy prices have been a large contributor and will make the BoE much more comfortable to cut perhaps in June. The release sank the Pound reversing all the way back to 0.4870 (2.0530) this morning.

The current interbank midrate is: NZDGBP 0.4847 GBPNZD 2.0631

The interbank range this week has been: NZDGBP 0.4804- 0.4873 GBPNZD 2.0519- 2.0816

The New Zealand Dollar (NZD) dipped to 0.6050 overnight against the US Dollar (USD) just above the yearly low set last week of 0.6037. NZ Inflation expectations kicked off the slump printing at 2.5% but remaining within the 1-3% inflation band almost cementing no further hikes, this was followed by a poor US inflation read. CPI y/y came in at 3.1% in December, down from November’s 3.4% but lower than forecast of 2.9%. Yes it’s a touch lower but not enough to fundamentally make a difference to overall inflation. The Fed will most likely indicate they won’t hike in June. Uncertainty with the next RBNZ decision seems evident with forecasters torn between policy settings and what may come. Certainly, as inflation continues to drop they move closer to the target range of 2.0%, that being said we predict the RBNZ will leave rates on hold until at least the third quarter. If we see the cross fall below 0.6050- 0.6000 it may go much lower.

The current interbank midrate is: NZDUSD 0.6111

The interbank range this week has been: NZDUSD 0.6048- 0.6151

The Australian Dollar (AUD) extended early week moves against the New Zealand Dollar (NZD) pushing up to 1.0685 (0.9360) in Friday sessions reversing much of last week’s losses. NZ inflation expectations helped buoy the AUD when figures released at 2.5% for early 2026- much lower than the 2.76% number from November 2023 which started a wave of selling in the NZD. Aussie employment data came in light at 0.5k instead of 26.4 forecast as the change in the number of new people employed in January 2024. The unemployment rate also ticked up to 4.1% from 3.9%, the first time it’s been over 4.0% since Jan 2022. The Australian economy needs to generate around 30,000 new jobs per month to stop the unemployment rate blowing out. Expectations are that the unemployment rate will go much higher this year as economic pressures continue. RBA rate cuts should come into play later this year.

The current interbank midrate is: NZDAUD 0.9361 AUDNZD 1.0671

The interbank range this week has been: NZDAUD 0.9352- 0.9446 AUDNZD 1.0586- 1.0692

The Euro (EUR), Australian Dollar (AUD) remains in its 4-week range, pivoting around mid-0.6060 (1.65’s) for the most part. The Euro got a boost from ECB’s Holzmann when he said there was a chance the central bank would cut rates in 2024 but slipped lower Friday and again off Monday’s open to 0.6070 (1.6470). The economic docket this week is thin with just Australian unemployment printing. The data is expected to reflect a rise in numbers from 3.9% to 4.0%. With a hawkish bias on inflation these job figures could impact later decisions on the timing of rate cuts. Direction over the week could support the Euro as the cross continues its bear channel lower.

Current Level: 1.6496
Resistance: 1.6670
Support: 1.6380
Last Weeks Range: 1.6455- 1.6609

The Euro (EUR), Australian Dollar (AUD) remains in its 4-week range, pivoting around mid-0.6060 (1.65’s) for the most part. The Euro got a boost from ECB’s Holzmann when he said there was a chance the central bank would cut rates in 2024 but slipped lower Friday and again off Monday’s open to 0.6070 (1.6470). The economic docket this week is thin with just Australian unemployment printing. The data is expected to reflect a rise in numbers from 3.9% to 4.0%. With a hawkish bias on inflation these job figures could impact later decisions on the timing of rate cuts. Direction over the week could support the Euro as the cross continues its bear channel lower.

Current Level: 0.6062
Resistance: 0.6105
Support: 0.6000
Last Weeks Range: 0.6020- 0.6077

Lower highs and lower lows remain the theme of 2024 in the Australian Dollar (AUD), British Pound (GBP) pair. Price action has been all Pound strength over recent weeks however the Aussie has managed a small recovery late last week. Currently trading at 0.5170 (1.9340) off lows at 0.5145 (1.9440) from Thursday. UK CPI y/y for January prints this week, expected to rise from 4.0% to 4.1% with uptick in energy costs based on a particularly cold month. Oil prices also rose in January along with geopolitical events that will most likely contribute. Australian unemployment releases Thursday and is predicted to rise from 3.9% to 4.0%. We expect the cross to retest the prior low at 0.5140 (1.9450) over the week.

Current Level: 1.9334
Resistance: 1.9450
Support: 1.9220
Last Weeks Range: 1.9250- 1.9452

The New Zealand Dollar (NZD), Euro (EUR) cross hasn’t yet found its feet in 2024, we have seen two distinct swings since early January clocking 0.5580 (1.7920) from the yearly open at 0.5720 (1.7480) then reversing back to 0.5690 (1.7570) today. Comments late in the week by ANZ suggesting the RBNZ will hike 2 more times in 2024 sent the kiwi into a spin higher. NZ inflation expectations print later today and should show the 2-year forecast in around 2.7%. If the data reflects a figure around 3.0%, we expect further policy tightening from the RBNZ with possibly 2 further hikes this year.

Current Level: 1.7580
Resistance: 1.7900
Support: 1.7420
Last Weeks Range: 1.7509- 1.7809