interbank midrate

FX News

FX Update: China worries markets

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%

FX News

AUD/EUR Transfer

Australian unemployment clicked higher to 3.7% from June’s 3.5%, the Chinese economic outlook has worsened, and the RBA were dovish leaning all helped to push the Australian Dollar (AUD) to new lows against the Euro (EUR) this morning clocking 0.5860 (1.7060) a 3 May 2020 level. German economic sentiment released slightly better than expected at -12.3 vs -15.0 which is bizarre as the economic situation has worsened lately. We expect the Euro has further to run before any change in momentum is seen.

The current interbank midrate is: AUDEUR 0.5897    EURAUD 1.6957

The interbank range this week has been: AUDEUR 0.5860- 0.5974    EURAUD 1.6738- 1.7063

FX News

AUD/GBP Transfer

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

FX News

AUD/USD Transfer

The US Dollar (USD) has lengthened out its hold over the Australian Dollar (AUD) to 0.6400 levels this morning earlier yesterday reaching 0.6365. The cross has cleared all remaining support levels of late with the remaining significant long-term support remaining at 0.6140. A mix of factors hasn’t helped the Aussie of late- “risk” markets were softer overnight, Chinese outlook fears and a dovish RBA all contributing. On the plus side Australian unemployment jumped from 3.5% to 3.7% strengthening the case for the RBA to hold rates for some time ahead. Meanwhile the Fed minutes wash up confirmed the Federal Reserve still sees inflation risks ahead and a potential need to raise rates if required. Sell the dip, buy the rip.

The current interbank midrate is: AUDUSD 0.6419

The interbank range this week has been: AUDUSD 0.6363- 0.6520

FX News

NZD/EUR Transfer

As we suggested earlier in the week- The New Zealand Dollar (NZD) has notched up another week of declines with price reaching 0.5435 (1.8400) against the Euro (EUR). The RBNZ left the cash rate on hold at 5.50% with hawkish rhetoric suggesting they could yet hike depending on how data flows in. Also of note is the broad based “risk flow” hampering the NZD with equity markets all softening. The Eurozone grew by a modest 0.3% in the second quarter of 2023, slightly up on the first quarter’s 0.2% with Ireland making waves with their solid 3.3% the largest in the eurozone. Buy the EUR on any spike.

The current interbank midrate is: NZDEUR 0.5451   EURNZD 1.8345

The interbank range this week has been: NZDEUR 0.5435- 0.5493   EURNZD 1.8202- 1.8398

FX News

NZD/GBP Transfer

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 News

NZD/AUD Transfer

As we said earlier the Australian Dollar (AUD) came under pressure, but it wasn’t until late Wednesday we saw a shift off 0.9210 (1.0860) levels back to 0.9235 (1.0830). NZ Retail Sales disappointed in the June quarter coming in at -1.0% vs -0.4% the 3rd consecutive decline representing consumers leaving money in their pocket, the biggest contributor being food and beverage with the sector struggling. On the whole, the pair remains well within recent ranges. Next week’s economic docket looks super thin, more of the same looks to be the likely theme.

The current interbank midrate is: NZDAUD 0.9225    AUDNZD 1.0833

The interbank range this week has been: NZDAUD 0.9192- 0.9266    AUDNZD 1.0792- 1.0879

FX News

NZD/USD Transfer

Different week- same result, in the New Zealand Dollar (NZD), US Dollar (USD) cross with the kiwi slipping again to fresh lows around 0.5930 levels. Well under the 0.6000 support line now it’s hard to see the NZD bouncing back with any gusto. The Reserve Bank of New Zealand confirmed they are happy with the current cash rate at 5.50% which has been constraining spending and inflation pressures. Fed minutes suggested they are hanging off rises in unemployment and slower growth in order to bring down inflation to target levels with a recession now on the cards later this year. On the chart the NZD looks into the abyss all the way to 0.5550.

The current interbank midrate is: NZDUSD 0.5936

The interbank range this week has been: NZDUSD 0.5903- 0.5997

FX News

FX Update

Key Points:

  • Interest rate hold expected from the RBNZ tomorrow.
  • Goldman Sachs expects only a 20% chance of a US recession over the next year.
  • The Federal Reserve are expected to leave their cash rate unchanged at the September meeting with cuts predicted mid-2024.
  • Chinese real estate company “Country Garden’s” share price crashed about 20% overnight reigniting the state of the economy’s recession fears.
  • NZ Business Services Index contracted from 49.6 to 47.8 in July.
  • German economic outlook is looking bleak amid a heavy manufacturing recession.
  • The US Dollar (USD) has been the strongest currency this month with the New Zealand Dollar (NZD) the worst performer.
FX News

NZD/USD Transfer

The New Zealand Dollar (NZD) slumped to a 5-week low to 0.6060 against the US Dollar (USD) this week. Friday the kiwi has started a recovery of sorts trading back to 0.6077 as I write but with global headwinds it may struggle to gain much momentum to the north. The NZ job market eased in the second quarter with job participation hitting an all-time high of 72.4% with more than 3M people now employed in the workforce. The unemployment rate rose slightly from 3.4% in the first quarter to 3.6 in the second, the question remains- will this be enough to force the hand of the RBNZ to hold interest rates at their next meeting on August 16th- we suspect not. Tonight’s Non-Farm Payroll (NFP) number is predicted to come in light reflecting an easing to the job’s market. Long term support in the cross is around the 0.6040 to 0.6000 range, recent sentiment suggests this area won’t hold.

The current interbank midrate is: NZDUSD 0.6080

The interbank range this week has been: NZDUSD 0.6061- 0.6226