currency

The actions of the RBNZ, while the corresponding inverse was true, from the RBA. The RBA has seen inflation persist and held the line, holding interest rates ‘higher for longer’. This has ensured that the AUD has remained firmer, despite headwinds, from a relentlessly stronger reserve currency. The closing of the interest rate differential margin has driven the cross rates lower. This is likely to continue, assuming the RBA holds the line on interest rates, as indicated. The cross was driven back to 0.8900, by August, as the dovish RBNZ monetary policy became apparent. It has recovered to above 0.9000, but the downside pressures remain.

The current interbank midrate is: NZDAUD 0.9043 AUDNZD 1.1050

The interbank range this week has been: NZDAUD 0.9038- 0.9101 AUDNZD 1.0987- 1.1064

The NZD has come crashing down, in recent times, due to the RBNZ’s sudden awakening. Governor Orr completely missed the inflation boat. The realisation that recessionary economic conditions in the NZ economy, had crushed inflation, was a long time coming. The reaction was swift and dramatic. He cut interest rates by 75 basis points, before the release of the quarterly inflation report, trying to avoid his failures being recognised. This cut the legs out from the KIWI, which has crashed below 0.5900, only to regain some ground to trade around 0.6050. The RBNZ is likely to cut more and undermine support for the NZD, while interest rate differentials, will only add to downside pressures.

The current interbank midrate is: NZDUSD 0.6057

The interbank range this week has been: NZDUSD 0.6037- 0.610

We expect the Australian Dollar (AUD) to resume its bull run of late against the Euro (EUR) extending recent gains from 0.6120 (1.6350). The ECB are widely expected to cut their cash rate Friday morning a quarter of a percent to 3.40% which could keep the Euro on the backfoot for a while. Price has also moved back above key moving averages suggesting a shift towards the long-term high at 0.6250 (1.6000) could be the play. Aussie employment data is also publishing Thursday and should release benign with unemployment remaining at 4.2%.

Current Level: 1.6217
Resistance: 1.6360
Support: 1.6000
Last Weeks Range: 1.6110- 1.6352

We expect the Australian Dollar (AUD) to resume its bull run of late against the Euro (EUR) extending recent gains from 0.6120 (1.6350). The ECB are widely expected to cut their cash rate Friday morning a quarter of a percent to 3.40% which could keep the Euro on the backfoot for a while. Price has also moved back above key moving averages suggesting a shift towards the long-term high at 0.6250 (1.6000) could be the play. Aussie employment data is also publishing Thursday and should release benign with unemployment remaining at 4.2%.

Current Level: 0.6166
Resistance: 0.6250
Support: 0.6110
Last Weeks Range: 0.6115- 0.6207

After closing the week on a high the Australian Dollar (AUD) has given back gains into Tuesday trading around the 0.5140 (1.9450) area against the British Pound (GBP). The Pound has had the help of Industrial Production and Manufacturing prints both releasing above expectation. UK GDP m/m for August also came in at 0.2% meeting predictions after two months of stagnation. Data this week comes in the form of UK inflation with markets expecting a 0.3% fall off 2.2% y/y. Anything north of this could spell trouble for the inflation cautious Bank of England. With stimulus measures in China looking better we believe the AUD could pick up points this week and retest 0.5170 (1.9340)

Current Level: 1.9425
Resistance: 1.9560
Support: 1.9300
Last Weeks Range: 1.9241- 1.9485

The New Zealand Dollar (NZD) clawed back valuable losses mid last week from 0.5530 (1.8080) to close the week at the 0.5585 (1.7900) level. Thin markets Monday made for a volatile start to the week’s trading, the kiwi bid into Tuesday at 0.5590 (1.7890). A shifty ECB have changed their mind on rate cuts from a month ago with markets now expecting a cut to 3.40% from 3.60% early Friday. There is argument that the ECB shouldn’t cut again this week based on falls in energy prices falsely having a knock-on effect to prices, also of note wage growth has slowed despite the ECB saying it hasn’t. The kiwi could pick up a few points this week.

Current Level: 1.7917
Resistance: 1.8100
Support: 1.7700
Last Weeks Range: 1.7769 – 1.8078

The New Zealand Dollar (NZD) clawed back valuable losses mid last week from 0.5530 (1.8080) to close the week at the 0.5585 (1.7900) level. Thin markets Monday made for a volatile start to the week’s trading, the kiwi bid into Tuesday at 0.5590 (1.7890). A shifty ECB have changed their mind on rate cuts from a month ago with markets now expecting a cut to 3.40% from 3.60% early Friday. There is argument that the ECB shouldn’t cut again this week based on falls in energy prices falsely having a knock-on effect to prices, also of note wage growth has slowed despite the ECB saying it hasn’t. The kiwi could pick up a few points this week.

Current Level: 0.5581
Support: 0.5525
Resistance: 0.5650
Last week’s range: 0.5531- 0.5627

The New Zealand Dollar (NZD) made gains mid last week off 0.4635 (2.1580) against the British Pound (GBP) closing at 0.4680 (2.1380). Early week moves have seen the kiwi give back gains to 0.4660 (2.1470) as we head into CPI prints for both currencies. UK inflation should dip to 1.9% from 2.2% y/y creeping just inside the Bank of England’s target. At the moment the BoE are expected to cut rates on the 7th of Nov by a further 0.25% to 4.75% however the central bank remains cautious over cutting too quick. The bear trend in the cross remains.

Current Level: 2.1473
Resistance: 2.1600
Support: 2.1170
Last Weeks Range: 2.1245- 2.1590