The New Zealand Dollar (NZD) is a little weaker off Monday’s open against the Euro (EUR) dropping to 0.5500 (1.8180) this morning as risk sentiment erodes. German Trade Balance came in light overnight printing at 15.9B compared to 17.6B predicted showing the country’s economy continues to waiver. A very thin calendar of events this week could see the EUR gather pace on a fundamental level.
Current Level: 0.5499
Support: 0.5410
Resistance: 0.5540
Last week’s range: 0.5441 – 0.5530
In a light week of economic data, the English Pound (GBP) for the second week running dropped back slightly against the New Zealand Dollar (NZD) opening the week around 0.4725 (2.1160). This week’s only data is the monetary policy hearing minutes Thursday. Global risk sentiment should dictate the week’s moves, we suspect the Pound may recover recent losses especially if markets remain “risk off”. Buying GBP currently north of 0.4700 (2.1276) looks decent given prices 2 weeks ago were well below this level.
Current Level: 2.1285
Resistance: 2.1600
Support: 2.0700
Last Weeks Range: 2.1127 – 2.1388
In a light week of economic data, the English Pound (GBP) for the second week running dropped back slightly against the New Zealand Dollar (NZD) opening the week around 0.4725 (2.1160). This week’s only data is the monetary policy hearing minutes Thursday. Global risk sentiment should dictate the week’s moves, we suspect the Pound may recover recent losses especially if markets remain “risk off”. Buying GBP currently north of 0.4700 (2.1276) looks decent given prices 2 weeks ago were well below this level.
Current Level: 0.4698
Resistance: 0.4830
Support: 0.4630
Last Weeks Range: 0.4675 – 0.4733
RBA later today will be about the tone and not the release with the cash rate widely expected to remain unchanged at 4.10% for now. The New Zealand Dollar (NZD) recovered losses late in the week to 0.9225 (1.0840) but hasn’t been able to hold here falling away into Tuesday to 0.9190 (1.0880) as markets position for RBA. With price below multiple moving averages we expect the NZD/AUD momentum to edge lower into the weekly close.
Current Level: 1.0865
Resistance: 1.0930
Support: 1.0750
Last Weeks Range: 1.0832 – 1.0895
RBA later today will be about the tone and not the release with the cash rate widely expected to remain unchanged at 4.10% for now. The New Zealand Dollar (NZD) recovered losses late in the week to 0.9225 (1.0840) but hasn’t been able to hold here falling away into Tuesday to 0.9190 (1.0880) as markets position for RBA. With price below multiple moving averages we expect the NZD/AUD momentum to edge lower into the weekly close.
Current Level: 0.9192
Resistance: 0.9300
Support: 0.9150
Last Weeks Range: 0.9178 – 0.9231
Rising bond yields and slowing global growth have created fragile sentiment of late, the New Zealand Dollar (NZD) coping the full brunt of this. The kiwi looked good on Friday against the US Dollar (USD) clocking early 0.60’s but stalled, falling back sharply into the close to 0.5940 as risk currencies were sold and equity markets went red. The yearly low at 0.5885 is close, below here and we could see much deeper losses in the NZD. On the docket this week is US ISM PMI data, a leading indicator of economic health.
Current Level: 0.5935
Resistance: 0.6100
Support: 0.5880
Last Weeks Range: 0.5885 – 0.6014
Market Overview
Key Points:
• US and Canada holidays create a quiet start to the week.
• Comments from ECB’s Lagarde- It’s critical for central banks to keep inflation expectations anchored. The chances of an ECB hike this month is 30%
• Oil closes at 85.80 the highest since November 2022
• Chinese Govt to create a new body to support the failing private sector as confidence plunges among businesses.
• US Non-Farm Payrolls slowed as the labour market starts to cool off. Unemployment rose from 3.5% to 3.8% suggesting the recent work done by the Federal Reserve is working.
• The New Zealand Dollar (NZD) was the strongest currency last week with the Euro (EUR) the worst performer.
Major Announcements last week:
• US Consumer Confidence Index dips to 106.1 from 114.0
• Australian CPI y/y 4.9% down from 5.4%
• US prelim GDP second quarter 2.1% based on expectations of a 2.4% read
• Chinese Caixin Manufacturing PMI beat estimate of 49.0 coming in at 51.0
• US Unemployment 3.8% vs 3.5% expected
German inflation remains stubbornly high, despite flagging economic activity, in the economy. Germany is in danger of a potential de-industrialisation, which can only harm the Eurozone, as a whole. The ECB has acted conservatively in their interest rate policy, but they may be forced to act ‘further and longer’ with rate rises. Inflation had been falling steadily in many EU Countries, but those precipitous falls, appear to have been arrested, with inflation rises in Germany, France and elsewhere in the Zone. The cross rate is likely to suffer accordingly.
Current Level: .5975
Support: .5925
Resistance: .6010
Last week’s range: .5955 – .5995
The ECB Chair, LeGarde, warned of continued inflationary pressures and further rate rises at the Jackson Hole Symposium. The floundering economic situation in the Eurozone remains dire, especially in the ‘engine-room’, that was Germany. German Industrial/Manufacturing Production has been under severe pressure, from extremely elevated energy costs, with warnings that Government subsidies may be coming to an end. Flagging global demand for exports and a precipitous collapse in imports, are revealing a possible structural crisis. The prospects of further interest rate rise, supporting the EUR and the cross rate, will probably mean more downward pressures.
Current Level: .5501
Support: .5420
Resistance: .5525
Last week’s range: .5455 – .5510
Market Overview:
Key Points: