EUR

The New Zealand Dollar (NZD) underperformed towards the end of the week against the US Dollar (USD) falling to 0.6110 levels as strong US data printed. Into Tuesday morning trade we have seen a small perk up in the kiwi to 0.6130 but topside this week could be tough going. We will get a look at US CPI tomorrow, predicted to dip lower from 3.2% to 3.1%. Anything around 3.2% will almost certainly set the scene for another round of interest rate hikes in order to bring down inflation to Fed target levels. Markets however would love to see a decent fall to bring forward rate cuts forecast for third quarter 2024.

The current interbank midrate is: NZDUSD 0.6120

The interbank range this week has been: NZDUSD 0.6104- 0.6131

Higher lows followed by higher highs in December continue to dominate the chart in the Australian Dollar (AUD), New Zealand Dollar (NZD) cross. The bull trend from late last week’s 0.9300 level to 0.9340 early this morning could signal further upside for the kiwi. NZ GDP prints Thursday for the third quarter ending September 30 and should highlight modest growth in the economy (0.2%) However, by removing migration the economy is expected to contract over the next 12 months. Aussie unemployment is predicted to increase slightly off 3.7% Thursday.

The current interbank midrate is: NZDAUD 0.9315 AUDNZD 1.0724

The interbank range this week has been: NZDAUD 0.9306- 0.9339 AUDNZD 1.0707- 1.0745

Risk assets this week have dragged on the New Zealand Dollar (NZD) the currency falling back to 0.6115 against the US Dollar (USD) on renewed greenback demand. Central banks around the globe are starting to talk more about easing policy and dropping rates sooner rather than later. The recent rhetoric around “higher for longer” is now being questioned with the first rate cut now predicted by the RBNZ by August 2024. Non-Farm Payroll prints tonight expected to come in light with unemployment to tick higher from 3.9%. Technically the kiwi looks well capped at 0.6220 and should continue to the downside. A December close below 0.6050 should signal further bearish price moves.

The current interbank midrate is: NZDUSD 0.6162

The interbank range this week has been: NZDUSD 0.6113- 0.6222

The New Zealand Dollar (NZD) extended moves north into Friday against the Australian Dollar (AUD) clocking 0.9390 (1.0650) an 8-week high. The RBA left rates unchanged at 4.35% Tuesday as widely predicted after the central bank hiked in November. New governor Michelle Bullock saying progress to bring down inflation to their target 2-3% band has been slower than forecast. The RBA have no meeting planned in January; we would not expect a further hike at February’s meeting if 4th quarter inflation prints considerably lower than the current 5.4% in late January. Prices in the pair are back around the 0.9345 (1.0700) zone with a little Aussie support in play.

The current interbank midrate is: NZDAUD 0.9339 AUDNZD 1.0699

The interbank range this week has been: NZDAUD 0.9287- 0.9384 AUDNZD 1.0656- 1.0767

The New Zealand Dollar (NZD) reached the lofty heights of 0.6210 to close out the week against the US Dollar (USD) the highest it’s been since late July. It’s been an incredible run through 0.6000 recently in a perfect storm with massive flows back into the kiwi. A hawkish RBNZ last week helped when the central bank signalled they would keep interest rates higher for a longer period. ANZ consumer confidence rose 3.8 points in November to 91.9- the highest level since January 2022. We have no local data publishing on this week’s docket, just US Non-Farm Payroll Friday, expected to come in poor with unemployment rising from 3.9%. The kiwi could be a little overbought- we see the NZD drifting lower over the coming days.

The current interbank midrate is: NZDUSD 0.6161

The interbank range this week has been: NZDUSD 0.6149- 0.6221

The Australian Dollar (AUD) retreated Monday off 1.0760 (0.9295) to 1.0730 (0.9320) early Tuesday as we head into RBA week. The kiwi has been doing well of late post last week’s RBNZ hawkish hold. We don’t expect a hike from the RBA today from 4.35% after the central bank raised it in November. The Aussie could come under selling pressure this week depending on the market mood. A break past 0.9340 (1.0710) and we could see further upside in the NZD, possibly a retest of the long-term mark at 0.9400.

The current interbank midrate is: NZDAUD 0.9307 AUDNZD 1.0736

The interbank range this week has been: NZDAUD 0.9289- 0.9335 AUDNZD 1.0712- 1.0765

The AUD remains in inflationary conditions as does the GBP, but the interest rate differential favours the Pound. The UK has experienced amongst the highest inflations levels in Europe and is well advanced in the rising interest rate environment. Although the differential favours the GBP, they may be reaching the end of the cycle and the Bank of England may choose to maintain at high levels, rather than raise rates again. The RBA has indicated that they may support further rate rises and this may be a short-term support for the AUD.

Current Level: 1.6440
Resistance: 1.6800
Support: 1.6300
Last Weeks Range: 1.6453 – 1.6665

Recessionary conditions across Europe are having the desired effect on inflation and the ECB may now look to halt interest rate rises. The ECB and Bank of England are clearly at the end of their monetary policy tightening cycle, while Australian inflationary conditions persist. These monetary and economic conditions may work in the favour of the AUD, for the short-term, but long-term pain is on the horizon. Fiscal largesse remains an issue across the West, with deficit and debt a root cause of inflation.

Current Level: 0.6047
Resistance: 0.6080
Support: 0.6020
Last Weeks Range: 0.6021 – 0.6077

The AUD remains in inflationary conditions as does the GBP, but the interest rate differential favours the Pound. The UK has experienced amongst the highest inflations levels in Europe and is well advanced in the rising interest rate environment. Although the differential favours the GBP, they may be reaching the end of the cycle and the Bank of England may choose to maintain at high levels, rather than raise rates again. The RBA has indicated that they may support further rate rises and this may be a short-term support for the AUD.

Current Level: 1.9080
Resistance: 1.9300
Support: 1.9000
Last Weeks Range: 1.9030 – 1.9185

Heavy recessionary economic conditions prevail in the UK and Europe, as high interest rates, blow-out deficit/debt spending and war continues. Inflation has been tumbling lower across Europe as the economic recession spreads across the economic zone. The war in Eastern Europe adds instability and threatens Geo-Political and economic conditions. Close attention will be paid to the coming PMI data set to be released, which will give insight to the current economic conditions.

Current Level: 1.7660
Resistance: 1.8100
Support: 1.7639
Last Weeks Range: 1.7650 – 1.0805