EUR

The AUD cross rate sunk below 0.9000, following the RBNZ rate cut and affirmations that the RBA would continue to hold interest rates at elevated levels, as inflation remains stubbornly high in the Australian economy. Interest rate differentials favour the AUD, but the NZD has continued to recover from lows, rising back towards 0.9200. This price action can be afforded to the positive economic data coming from NZ and risk sentiment. The numbers point to downside on the cross-rate, back towards 0.9000.

The current interbank midrate is:              NZDAUD .9225  AUDNZD 1.0830

The interbank range this week has been:    NZDAUD .9150 – .9250            AUDNZD 1.0800 – 1.0950

The EUR has a similar experience to the NZD, following rate cuts from the ECB and the RBNZ. Initial downside, has been replaced by rebuilding in the EUR, as economic confidence returns, with the promise of growth from lower interest rates. The interest rate differentials will probably follow each other, remaining static, which is probably where the cross rate will be.

The current interbank midrate is:              NZDEUR .5650  EURNZD 1.7699

The interbank range this week has been:    NZDEUR .5500 – .5650            EURNZD 1.7699 – 1.8181

The surprising buoyancy of the EUR, following rate cuts from the ECB, has worked to bring the cross rate back toward 0.6100. The ECB has space to continue rate cuts, while the RBA has indicated a penchant, for at least holding rates, at these elevated levels. This should support favourable conditions for the AUD, in terms of the cross-rate, with the EUR.

The current interbank midrate is: AUDEUR .6130 EURAUD 1.6313

The interbank range this week has been: AUDEUR .6050-.6130 EURAUD 1.6313 – 1.6528

The GBP has also shared the experience of the EUR and the NZD, following interest rate cuts, from the Bank of England. The cross rate has been relatively stable and this is likely to continue, if respective Central Banks follow the rate cutting cycle. Positive economic conditions appear to be returning to the ‘Old Country’, but significant challenges remain. There are emerging political risks, domestically and internationally, while the upcoming budget may have a negative impact. The Labour Government is facing difficult choices and possible tax rises, as an option, will not be well received.

The current interbank midrate is: NZDGBP .4760 GBPNZD 2.1008

The interbank range this week has been: NZDGBP .4700 – .4770 GBPNZD 2.0964 – 2.1276

The ECB have cut rates and the interest rate differential with the AUD looks set to increase in the favour of the commodity currency. The AUD/EUR cross fell all the way to 0.5900, only to regain ground, following the August resurgence, to trade up above 0.6050. The commodity demand and interest rate differentials support a stronger AUD on the cross with the EUR.

Current Level: 1.6454
Resistance: 1.6600
Support: 1.6393
Last Weeks Range: 1.6445- 1.6570

The ECB have cut rates and the interest rate differential with the AUD looks set to increase in the favour of the commodity currency. The AUD/EUR cross fell all the way to 0.5900, only to regain ground, following the August resurgence, to trade up above 0.6050. The commodity demand and interest rate differentials support a stronger AUD on the cross with the EUR.

Current Level: 0.6035
Resistance: 0.6100
Support: 0.6000
Last Weeks Range: 0.6010- 0.6040

The Bank of England have cut interest rates, thereby attracting flows to the AUD, commodity currency. The cross rate has not varied too greatly as the GBP undergoes a honeymoon period, under the new Labour Government, and support for the GBP has been improving. This will likely not continue and expect the downward pressure, on the cross, to favour the AUD.

Current Level: 1.9525
Resistance: 1.9800
Support: 1.9230
Last Weeks Range: 1.9267- 1.9531

The ECB led the way on interest rate cuts, among the major world Central Banks, although the Swedish Riksbank did begin the cycle first. The ECB has been under immense pressure as recession engulfs the European economies, especially manufacturing in the engine room of Europe, Germany. The rate cuts were welcomed and allowed the cross rate to the NZD to rise to above 0.5700. The differential is contracting, as the RBNZ joins the party, and the cross rate is trading around 0.5550.

Current Level: 1.7878
Resistance: 1.8181
Support: 1.7699
Last Weeks Range: 1.7947 – 1.8211

The ECB led the way on interest rate cuts, among the major world Central Banks, although the Swedish Riksbank did begin the cycle first. The ECB has been under immense pressure as recession engulfs the European economies, especially manufacturing in the engine room of Europe, Germany. The rate cuts were welcomed and allowed the cross rate to the NZD to rise to above 0.5700. The differential is contracting, as the RBNZ joins the party, and the cross rate is trading around 0.5550.

Current Level: 0.5560
Support: 0.5500
Resistance: 0.5650
Last week’s range: 0.5520- 0.5560

The Bank of England cut rates at the beginning of August, following the election of the new Labour Government. This was an impediment to the GBP initially, but as other Central Banks cut rates, the cross rate has settled around 0.4685. The Bank of England and the RBNZ are in ‘sync’, in the interest rate cycle, so expect fairly stable cross rates. The provison is inflation and any re-emergence in inflation, may cause a pause in rate cuts.

Current Level: 2.1194
Resistance: 2.1505
Support: 2.1050
Last Weeks Range: 2.1200- 2.1335