EUR

Price in the Australian Dollar (AUD), New Zealand Dollar (NZD) cross this week is moving within Fibonacci key levels between 0.9220 (1.0850) and 0.9260 (1.0800). The Aussie may come under further pressures this week as investors digest Chinese economic woes. Of consideration are cloudy metal prices led by iron ore coming off over 3% in the last 30 days and a dovish RBA. NZ Retails Sales prints tomorrow, expected to come in at -0.4% for the June quarter.

Current Level: 0.9239
Resistance: 0.9310
Support: 0.9165
Last Weeks Range: 0.9194 – 0.9277

Downside pressures in the New Zealand Dollar (NZD) eased slightly Monday against the US Dollar (USD) with price settling around the weekly open at 0.5925 this morning. With Fed’s Powell expected to deliver a hawkish speech later this week at the Jackson Hole event around how much interest rates could go in order to drag down inflation his comments may spook the markets. After all, recently we have been prepped for interest rate cuts in 2024 something markets had originally been forecasting to happen as soon as late this year. Rhetoric suggesting the fight against inflation is “far from over’ will most likely be the theme. NZ Retail Sales prints tomorrow, predicted to come in poor and later this week we have US consumer sentiment.

Current Level: 0.5927
Resistance: 0.6400
Support: 0.5900
Last Weeks Range: 0.5901 – 0.5994

FX Update

Key Points:

• The Reserve Bank of New Zealand holds interest rates at 5.50%
• Japanese “core-core” inflation – (excluding food and energy) rises to 4.3%
• Gold has fallen to the lowest level since March- 1980 per ounce.
• Chinese Industrial production released down on expectations in the second quarter, with domestic indicators like real estate and demand for exports also taking hits.
• The US 30-year bond traded to 4.42% overnight breaking above last year’s high and matching 2011 levels. This is starting to weigh on equity markets with US indices all coming off recent highs.
• The British Pound (GBP) has been the strongest currency this week with the Australian Dollar (AUD) the worst performer.

The New Zealand Dollar (NZD) continued its downward spiral late last week reaching 0.5980 closing below key support at the big figure- 0.6000 against the US Dollar (USD). Monday’s action has extended moves to the downside clocking 0.5950 in early Tuesday. To be honest, the kiwi looks “down for the count” at the moment trading into thin air through 0.6000 was a major signal we could see bigger moves into the 0.50’s. It’s a busy week of releases for the pair with a slew of data to publish. The RBNZ official cash rate is expected to hold rates at 5.50% followed by Fed minutes Thursday. At some point the NZD will bounce higher, buyers of USD should grab the spikes.

Current Level: 0.5974
Resistance: 0.6360
Support: 0.5930
Last Weeks Range: 0.5974 – 0.6117

Mid last week, prices in the Euro (EUR), Australian Dollar (AUD) cross fell through long term support at 0.5960 (1.6780) to reach 0.5930 (1.6860) at the close. Trading into Monday extended this run to 0.5910 (1.6930) before reversing to 0.5950 (1.6815) early Tuesday. If we look back 1 year on the chart to August 2022 we see a familiar pattern of lower highs followed by lower lows constantly repeating. Looking ahead we see Australian employment data Thursday with unemployment expected to tick higher from 3.6%.

Current Level: 1.6815
Resistance: 1.7200
Support: 1.6650
Last Weeks Range: 1.6685 – 1.6884

Mid last week, prices in the Euro (EUR), Australian Dollar (AUD) cross fell through long term support at 0.5960 (1.6780) to reach 0.5930 (1.6860) at the close. Trading into Monday extended this run to 0.5910 (1.6930) before reversing to 0.5950 (1.6815) early Tuesday. If we look back 1 year on the chart to August 2022 we see a familiar pattern of lower highs followed by lower lows constantly repeating. Looking ahead we see Australian employment data Thursday with unemployment expected to tick higher from 3.6%.

Current Level: 0.5947
Resistance: 0.6000
Support: 0.5815
Last Weeks Range: 0.5922 – 0.5993

The Australian Dollar (AUD) came under pressure late in the week reversing early week gains from 0.5160 (1.9370) to close out the week at 0.5115 (1.9550). We are in our 5th week straight of lower highs and lower lows in the cross as the pair reaches an April 2020 low Monday extending declines. UK GDP printed at 0.5% in June vs 0.2% expected, up from May’s 0.1% showing promising growth led by industrial production. Today’s RBA minutes should give us more clues as to policy guidance and if the RBA has finished hiking. UK CPI y/y Thursday should print around a percent lower at 6.8%, certainly the release will define future interest moves. We expect further declines in the AUD this week.

Current Level: 1.9554
Resistance: 2.0200
Support: 1.9160
Last Weeks Range: 1.9330 – 1.9561