currency

UK mortgage approvals printed lower than expectation yesterday at 43,000 vs forecast of 44,000 dipping from August’s 45447 number. The British Pound (GBP) holding up Monday in the face of decent “risk on” moves. The kiwi underperformed with price easing back to 0.4800 (2.0840). Baffling really as the kiwi has bounced higher off recent lows against other crosses but has not reacted the same in the NZD/GBP. Equity markets were solid overnight as geopolitical fears in Gaza eased, the NZD continues to be sold. This week’s Bank of England (BoE) cash rate holds our attention with most punters fairly sure the BoE will keep rates unchanged at 5.25%.

Current Level: 0.4801
Resistance: 0.4825
Support: 0.4760
Last Weeks Range: 0.4770 – 0.4823

The Australian Dollar (AUD) continues to outperform the New Zealand Dollar (NZD), the cross reaching 0.9150 (1.0930) earlier this morning as it extends downside moves from mid October’s 0.9425 (1.0610). The cross looks to be teetering around decent support at 0.9140 (1.0940). The Aussie was well supported post a bumper Retail Sales release and talk of central bank divergence with next week’s RBA eyeing a hike. The key data standout this week is NZ employment data with predictions the unemployment rate could rise to 3.9% from 3.6%. The rundown to current levels looks oversold watch for a reversal.

Current Level: 1.0904
Resistance: 1.0930
Support: 1.0830
Last Weeks Range: 1.0816 – 1.0913

The Australian Dollar (AUD) continues to outperform the New Zealand Dollar (NZD), the cross reaching 0.9150 (1.0930) earlier this morning as it extends downside moves from mid October’s 0.9425 (1.0610). The cross looks to be teetering around decent support at 0.9140 (1.0940). The Aussie was well supported post a bumper Retail Sales release and talk of central bank divergence with next week’s RBA eyeing a hike. The key data standout this week is NZ employment data with predictions the unemployment rate could rise to 3.9% from 3.6%. The rundown to current levels looks oversold watch for a reversal.

Current Level: 0.9166
Resistance: 0.9230
Support: 0.9150
Last Weeks Range: 0.9163 – 0.9245

The New Zealand Dollar (NZD) was higher off the weekly open against the US Dollar (USD) pushing to 0.5845 this morning as it extends the rally from last week’s low at 0.5770. We are not sure how much this upside wave has in it with geopolitical risks heating up, but a decent enough level to buy USD at, all things considered. For now, risk appetite has improved based on the Gaza/Israel situation. Equities, commodities, and futures markets were all higher overnight while the safe haven “gold” has fallen back along with Crude Oil -3.5%. It’s a big week of economic data on the docket with NZ employment data releasing tomorrow, unemployment is expected to rise from 3.6% to 3.9%. If the figure comes in low we may see more talk around the RBNZ needing to hike again. The Federal Reserve will announce no change from the 5.50% interest rate before Non-Farm Payroll (NFP) release Friday night. Certainly, anything north of 0.5850 represents decent buying of USD.

Current Level: 0.5838
Resistance: 0.6000
Support: 0.5770
Last Weeks Range: 0.5772 – 0.5871

Market Overview

Key Points:

• Risk currencies recovered Monday which is a small miracle if we look at how ugly the markets have been of late. The greenback is lower, and equities have started the week well.
• Australian Retail Sales +0.9% vs +0.3% releasing much higher than predicted. This will be adding to the case for an interest rate hike at the RBA’s 7th November meeting.
• Bank of Canada’s Macklem is suggesting the BoC (Bank of Canada) will need to raise policy to restore price stability. It’s reported that the Canadian economy may be headed for a sharp pullback into a recession early next year.
• Crude Oil has fallen over 3.5% in overnight trading to 82.55 as geopolitical fears in Gaza ease. We expect prices to drop in the coming days as OPEC tightens global supply/demand.
• German inflation eased in October contracting 0.3% y/y for the third quarter to 0.0% from 0.3%. This takes the y/y number to 3.8% down from 4.5%
• The Federal Reserve look to be finished with rate hikes saying they expect rates to stay high for an extended period before aggressive hikes kick in, in 2025.
• The Swiss Franc (CHF) has been the strongest currency in the month of October while the New Zealand Dollar (NZD) has largely underperformed and is by far the worst performer.

The New Zealand Dollar (NZD) looked good Monday rising to 0.5870 against the US Dollar (USD) but stalled around this area as markets turned “risk off” and the kiwi was sold. Global uncertainties in Gaza are attributing to broad buying of USD, the kiwi easing lower into Friday clocking 0.5775 a 1 year low in the pair. A flurry of US data in the form of Durable Goods, advance GDP, 4.9% q/q vs 4.5% forecast, jobless claims and pending home sales have held up the greenback. On the docket next week, we have NZ jobs numbers, unemployment is predicted to rise from 3.6% and key Fed Funds Rate announcement, we expect the Fed to leave rates unchanged at 5.5%. In a very bear market, we expect the kiwi to fall further from current levels. If we look at the chart we see thin air to support at 0.5550. I know it hurts to buy USD at these levels but many need to consider that in several weeks/months we could be staring down the barrel.

The current interbank midrate is: NZDUSD 0.5820

The interbank range this week has been: NZDUSD 0.5772- 0.5869

The New Zealand Dollar extended declines this week against the Australian Dollar (AUD) reaching 0.9165 (1.0910) a new 26 July 2023 low. The Aussie gained on higher-than-expected CPI in September coming in at 5.6% y/y after 5.3% was forecast. The RBA did not comment on whether they will consider raising rates at their November 7 meeting suggesting the outcome is within range of what they were expecting. We don’t believe a word of it with markets positioning for a rise from 4.10%. Next week’s NZ Jobs data is our focus, unemployment predicted to rise above 3.6%. On the chart downside moves look limited for now with solid support at 0.9175 (1.0900)

The current interbank midrate is: NZDAUD 0.9197 AUDNZD 1.0868

The interbank range this week has been: NZDAUD 0.9163- 0.9244 AUDNZD 1.0817- 1.0913