EUR

The RBA cut interest rates Tuesday by 25 points to 4.10% from 4.35%, the first time the central bank has cut rates since October 2020. The review was hawkish as markets were expecting from Governor Bullock suggesting progress has been made with inflation, but they have a way to go, the bank pencilling just 2 further cuts to 3.6% this year. The cross travelling from 0.8985 (1.1130) post the news to 0.8950 (1.1170). The RBNZ also cut rates 50 points as widely predicted following the RBA Wednesday 50 points to 3.75% but was dovish in comparison on future economic prospects. The NZD clawing back losses to 0.9025 (1.1080) into Friday. Bumper Aussie employment data just out with unemployment remaining at 4.1% and net employment rising 44,000 in January has buyers back into AUD with price moving back to 0.9000 (1.1110)

The current interbank midrate is: NZDAUD 0.9000 AUDNZD 1.1102
The interbank range this week has been: NZDAUD 08950- 0.9035 AUDNZD 1.1068- 1.1173

The Reserve bank of New Zealand (RBNZ) cut the key interest rate by 50 points Wednesday from 4.25% to 3.75% as predicted. This was the fourth time in a row they have dropped it. The central bank is now forecasting a drop to 3.00% in 2025, we predict 50 of this will come at the April policy meeting with the economy still spluttering. US Dollar weakness came into play midweek with tariff talks and a “risk on” tone after positive developments in the Russia/Ukraine peace talks. At 0.5760 into Friday up from the midweek low of 0.5675 we expect further topside moves by the kiwi could be overdone.

The current interbank midrate is: NZDUSD 0.5759
The interbank range this week has been: NZDUSD 0.5677- 0.5771

The Australian Dollar (AUD) extended gains off Monday’s open against the Euro (EUR) to 0.6080 (1.6445) before dropping back to 0.6065 (1.6490) into the early Tuesday session. The Euro has been feeling better about a potential peace deal between Ukraine and Russia. This morning moves however have markets repositioning for an RBA cut later today. The central bank should cut 25 points to 4.10%, but this is not a given with overnight speculation the RBA could “hold” a while with mounting stubborn inflation and strong employment growth.

Current Level: 1.6507
Resistance: 1.6770
Support: 1.6400
Last Weeks Range: 1.6392- 1.6632

The Australian Dollar (AUD) extended gains off Monday’s open against the Euro (EUR) to 0.6080 (1.6445) before dropping back to 0.6065 (1.6490) into the early Tuesday session. The Euro has been feeling better about a potential peace deal between Ukraine and Russia. This morning moves however have markets repositioning for an RBA cut later today. The central bank should cut 25 points to 4.10%, but this is not a given with overnight speculation the RBA could “hold” a while with mounting stubborn inflation and strong employment growth.

Current Level: 0.6058
Resistance: 0.6100
Support: 0.5965
Last Weeks Range: 0.6012- 0.6100

The Australian Dollar (AUD), British Pound (GBP) cross has a busy calendar this week led by the RBA cash rate and statement later today. This is followed by Aussie jobs numbers Thursday and UK Retail Sales Friday. The RBA is expected to cut interest rates from 4.35% to 4.10% in what could be a hawkish read with the central bank possibly considering no cut this time around at all. Consensus is that with a tight labour market, stubborn CPI governor Bullock could signal a shallower rate cut cycle for 2025. Also of note is UK inflation y/y with forecasts this could come in around 2.8% in January up from 2.5% which could send the GBP rallying.

Current Level: 1.9872
Resistance: 2.0000
Support: 1.9615
Last Weeks Range: 1.9638- 1.9943

The New Zealand Dollar (NZD) improved off 0.5410 (1.8490) late in the week to close around the 0.5465 (1.8300) level as risk markets came back online. Early Monday we saw the kiwi extend to 0.5480 (1.8250) however it’s been unable to maintain around this level falling to 0.5470 (1.8280). Eurozone GDP was well received coming in at 0.1% after 0.0% was forecast. ECB’s Panetta believes the ECB should be cutting 75 points over the next 12 months in line with downward pressures on inflation. Tomorrow’s RBNZ policy announcement should cut rates by 50 points potentially with a dovish statement. This could put pressure on the NZD this week.

Current Level: 1.8298
Resistance: 1.8530
Support: 1.8230
Last Weeks Range: 1.8207 – 1.8493

The New Zealand Dollar (NZD) improved off 0.5410 (1.8490) late in the week to close around the 0.5465 (1.8300) level as risk markets came back online. Early Monday we saw the kiwi extend to 0.5480 (1.8250) however it’s been unable to maintain around this level falling to 0.5470 (1.8280). Eurozone GDP was well received coming in at 0.1% after 0.0% was forecast. ECB’s Panetta believes the ECB should be cutting 75 points over the next 12 months in line with downward pressures on inflation. Tomorrow’s RBNZ policy announcement should cut rates by 50 points potentially with a dovish statement. This could put pressure on the NZD this week.

Current Level: 0.5465
Support: 0.5400
Resistance: 0.5485
Last week’s range: 0.5407- 0.5492

Last week’s long positions in the New Zealand Dollar (NZD), British Pound (GBP) cross have been unwound this week with the kiwi giving back gains from 0.4565 (2.1900)  levels to 0.4540 (2.2030) this morning. A big part of this will be the RBNZ cash rate tomorrow, the central bank is expected to cut interest rates 50 points to 3.75%. What will be interesting is the ongoing position by the RBNZ and whether they will maintain or get more aggressive for the remainder of 2025. Currently we only have 100 points priced in. Tomorrow’s UK Inflation could tick higher to 2.8% in January from 2.5% y/y and could spike the Pound on the release.

Current Level: 2.2036
Resistance: 2.2380
Support: 2.1900
Last Weeks Range: 2.1832- 2.2176

Last week’s long positions in the New Zealand Dollar (NZD), British Pound (GBP) cross have been unwound this week with the kiwi giving back gains from 0.4565 (2.1900)  levels to 0.4540 (2.2030) this morning. A big part of this will be the RBNZ cash rate tomorrow, the central bank is expected to cut interest rates 50 points to 3.75%. What will be interesting is the ongoing position by the RBNZ and whether they will maintain or get more aggressive for the remainder of 2025. Currently we only have 100 points priced in. Tomorrow’s UK Inflation could tick higher to 2.8% in January from 2.5% y/y and could spike the Pound on the release.

Current Level: 0.4538
Resistance: 0.4565
Support: 0.4470
Last Weeks Range: 0.4509- 0.4580

The New Zealand Dollar (NZD) sits around the lower band of the recent trendline support against the Australian Dollar (AUD) at 0.9020 (1.1080) this morning with markets awaiting both central bank interest rate announcement this week. The RBA is first up later today and could release a hawkish policy tone with a 25-point cut. The RBA has maintained the rate steady at 4.35% since November 2023. Tomorrow the RBNZ will also cut rates 50 points to 3.75% with a small chance of a 75-point cut. The policy divergence will be the telling factor with the RBNZ predicted to be downbeat (dovish) around 2025 incoming data predictions implying a more aggressive easing plan. If we are correct this could send the NZD/AUD well into the high 80’s.

Current Level: 1.1084
Resistance: 1.1150
Support: 1.1030
Last Weeks Range: 1.1076 – 1.1142