currency

Rallying equity prices boosted the New Zealand Dollar (NZD) Monday in the face of Geopolitical tensions developing in Israel. The kiwi pushed above pivotal 0.6000 early this morning against the US Dollar (USD) clocking 0.6025 as I write. If we get a daily close above this area this will be the first time since early August offering further momentum to the topside. Later in the week however if the situation in Israel worsens we could see offsetting losses develop. Buying USD over 0.6000 looks decent buying right now all things considered. US CPI y/y prints Friday the main news for the week, expectations are for a small drop to 3.6%, perhaps not enough for the Fed to leave rates on hold at their November 2 meeting.

Current Level: 0.6031
Resistance: 0.6200
Support: 0.5850
Last Weeks Range: 0.5871 – 0.6006

Market Overview

Key Points:

• Weekend attacks in the Gaza Strip fuel geopolitical tensions
• The US Military is supplying air defences, munitions and security assistance to Israel in response to the massive attack by Hamas terrorists.
• Crude Oil has surged to over 84.00 per barrel as the battle in Israel takes hold. The Israeli prime minister Netanyahu said he has no choice but to launch assaults.
• The war in Israel could lead to “safe haven” buying of Gold and the greenback.
• The ECB are saying that rapid rate rises are behind them, convinced that they are “done” rising as the economic picture improves.
• The Japanese Yen (JPY) has been the strongest currency this month while the Australian Dollar (AUD) has been the worst performer.

The New Zealand Dollar (NZD) recovered off 0.5870 midweek post the RBNZ meeting reversing losses against the US Dollar (USD) to 0.5965 into Friday. Despite dovish comments from the RBNZ governor the kiwi held firm, the currency also benefiting from improving risk markets as equities rallied. The central bank expects inflation to fall to between the 1-3% target around mid-2024 but monetary policy would remain at sustained levels for a decent period. Tonight’s Non-Farm Payroll will be closely watched and could be a poor report if Thursday’s ADP is a signal. With the NZD targeting 0.6000 on the chart anything north of this level represents good buying of USD in a bear cross.

The current interbank midrate is: NZDUSD 0.5966

The interbank range this week has been: NZDUSD 0.5871- 0.6008

The RBA’s new governor Michele Bullock gave her first statement Tuesday cunningly not suggesting a further rate hike was a dead cert at the upcoming November meeting. While the central bank kept rates at 4.10% the stage was set for a continuation of some Aussie form with further rises to inflation looking likely. The RBNZ also left their interest rate at 5.50% in a dovish read, the kiwi reversing wins from 0.9389 (1.0650) to 0.9330 (1.0720) post data. Into Friday the kiwi has collected more bids reaching 0.9370 (1.0670) the currency eying the long-term price at 0.9470 (1.0560) from mid-May 2023. We wouldn’t bet against it.

The current interbank midrate is: NZDAUD 0.9360 AUDNZD 1.0670

The interbank range this week has been: NZDAUD 0.9307- 0.9384 AUDNZD 1.0656- 1.0744

The Australian Dollar (AUD) surged to reach 0.6130 (1.6320) in late Friday trading against the Australian Dollar (AUD) prior to falling back to 0.6090 (1.6420) at the  close of the week. Monday’s action saw more EUR dominance, price pulling back towards 0.6060 (1.6500). The long-term bull channel from 0.5865 (1.7050) mid-August dominates the chart with resistance in the move seen at 0.6155 (1.6250) from here. RBA later today with the central bank not expected to hike from 4.10% for now.

Current Level: 1.6466
Resistance: 1.7000
Support: 1.6260
Last Weeks Range: 1.6318 – 1.6589

The Australian Dollar (AUD) surged to reach 0.6130 (1.6320) in late Friday trading against the Australian Dollar (AUD) prior to falling back to 0.6090 (1.6420) at the close of the week. Monday’s action saw more EUR dominance, price pulling back towards 0.6060 (1.6500). The long-term bull channel from 0.5865 (1.7050) mid-August dominates the chart with resistance in the move seen at 0.6155 (1.6250) from here. RBA later today with the central bank not expected to hike from 4.10% for now.

Current Level: 0.6073
Resistance: 0.6150
Support: 0.5880
Last Weeks Range: 0.6028- 0.6128

For 6 straight weeks the Australian Dollar (AUD) has outperformed the British Pound (GBP), the cross reaching 0.5300 (1.8860) late Friday a late June high. Risk action Monday saw the AUD give back gains to 0.5265 (1.9000) as markets await this week’s key RBA rate announcement data. Odds for the RBA to hike from 4.1% later today is slim given recent inflation data and Retail Sales prints. We see resistance at 0.5250 (1.9040), the 50-day MA, price could resume its trajectory towards 0.5320 (1.8800) over the week.

Current Level: 1.8996
Resistance: 1.9900
Support: 1.8600
Last Weeks Range: 1.8857 – 1.9129