The New Zealand Dollar (NZD) traded a smidge lower off Monday’s open to 0.5885 (1.6990) into Tuesday sessions consolidating around a light calendar week for the cross. Earlier the Euro has proven to be resilient after Chinese economic concerns, however this week the pair may trade in a tightish range with a modest bullish bias.
Current Level: 0.5439
Resistance: 0.5650
Support: 0.5400
Last Weeks Range: 0.5435 – 0.5493
The New Zealand Dollar (NZD) showed signs early in the week of recovering off recent lows but instead carried on its downside path into Tuesday booking a new low of 0.4635 (2.1580) against the British Pound (GBP). It’s hard to see much change this week in a light calendar of data with only UK manufacturing printing Wednesday. Recent higher inflation reads should ensure the kiwi stays out of favour.
Current Level: 2.1523
Resistance: 2.1600
Support: 2.0530
Last Weeks Range: 2.1171 – 2.1529
The New Zealand Dollar (NZD) showed signs early in the week of recovering off recent lows but instead carried on its downside path into Tuesday booking a new low of 0.4635 (2.1580) against the British Pound (GBP). It’s hard to see much change this week in a light calendar of data with only UK manufacturing printing Wednesday. Recent higher inflation reads should ensure the kiwi stays out of favour.
Current Level: 0.4646
Resistance: 0.4870
Support: 0.4630
Last Weeks Range: 0.4644 – 0.4723
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: 1.0818
Resistance: 1.0740
Support: 1.0910
Last Weeks Range: 1.0779 – 1.0876
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
Market Overview
Key Points:
• The New Zealand Dollar and Australian Dollar have both kicked off the week wobbly based on last week’s bearish pressures.
• The New Zealand Trade deficit widened from 0.11B to 1.11B in July as imports dropped 16% and exports fell 14%
• German producer prices fell 1.1% m/m for July vs 0.1% expected.
• US Treasury yields rise again, the 10-year bond rising to a 2007 high.
• Latest signs are that the Bank of Canada (BoC) will remain on hold at the September meeting.
• Chinese growth forecast for 2023 shifts from 5.2% to 4.8%, meanwhile the People’s Bank of China (PBOC) cuts their prime 1-year rate to 3.45% from 3.55% – no cut to the 5 year came as a surprise.
• The British Pound (GBP) has been the strongest currency this week with the Australian Dollar (AUD) the worst performer.
Major Announcements last week:
• Chinese Retail Sales y/y 2.5% vs 4.2% expected
• US Retail Sales for July 0.7% vs 0.4%
• RBNZ retain cash rate at 5.5%
• UK CPI y/y 6.8% vs 6.7% predicted
• Australia unemployment rate 3.7% up from 3.6%
The English Pound (GBP) continued to dominate moves across the main board of currencies, extending its dominance over the Australian Dollar (AUD) in a big way this week. The biggest weekly move in a year by the cross sees it trading at 0.5015 (1.9950) this morning compared to the weekly open price of 0.5130 (1.9490). Great for sellers of GBP- not so flash if you are buying. A bumper UK jobs earning number followed by an improving inflation read – 6.8% y/y in July down from June’s 7.9% won’t be enough for the Bank of England who will almost certainly bump their cash rate 50 points next month to 5.75%. There isn’t much standing in the way of the cross testing the April 2020 level of 0.4950 (2.0200) over the following days.
The current interbank midrate is: AUDGBP 0.5031 GBPAUD 1.9876
The interbank range this week has been: AUDGBP 0.5007- 0.5130 GBPAUD 1.9487- 1.9966
Inflation in the UK improved to 6.8% y/y down from 7.9% in June coming in bang on expectations. It’s good news for the Bank of England (BoE) however they still have work to do in order to bring down inflation further. The central bank should raise rates next month 50 basis points instead of the earlier 0.25% consensus. The New Zealand Dollar (NZD) extended its bear run over the week to clock 0.4870 (2.1530) breaking past March 2020 support, the next support is 0.4140 (2.4170), we think it will be one way traffic for a while yet.
The current interbank midrate is: NZDGBP 0.4652 GBPNZD 2.1496
The interbank range this week has been: NZDGBP 0.4644- 0.4724 GBPNZD 2.1168- 2.1533
FX Update
Key Points: