JPY

The Australian Dollar (AUD) extended moves higher over the week against the New Zealand Dollar (NZD) reaching 1.0945 (0.9135) before falling back earlier this morning to 1.0900 (0.9175) numbers. Thursday’s NZ GDP followed by Aussie job’s data yesterday set the stage for a volatile few hours. NZ GDP initially improved the kiwi to 1.0875 (0.9195) with a print better than expected at -0.2% holding above forecast at -0.4% with stats blaming retail spending, accommodation and food services. Australian jobs numbers ticked up along with unemployment remaining stable at 4.2% boosting the AUD and confirming the RBA won’t cut rates at next week’s policy meeting. We see a push through support at 0.9130 (1.0950) over the coming days as the Aussie builds more momentum.

The current interbank midrate is: NZDAUD 0.9153 AUDNZD 1.0925

The interbank range this week has been: NZDAUD 0.9137- 0.9206 AUDNZD 1.0862- 1.0944

It’s been a “shifty” few days in the New Zealand Dollar (NZD), US Dollar (USD) cross with action between 0.6170 and 0.6270 seen around Federal Reserve and NZ GDP releases. The Fed surprised markets when they cut interest rates from 5.50% to 5.00% instead of 25 points predicted sending the USD rallying. Yes, rallying- we were surprised as anyone to see the kiwi post losses around the release. GDP helped the kiwi push a little higher throughout yesterday’s sessions. Year on year NZ GDP fell back to -0.2%, coming in lighter than the -0.4% we were expecting driven mostly by spending declines in food, accommodation and food services such as restaurant trade. We expect the NZD to retest 0.6300 before the weekly close.

The current interbank midrate is: NZDUSD 0.6235

The interbank range this week has been: NZDUSD 0.6152- 0.6267

The Euro (EUR) hasn’t been able to hold levels around 1.6560 (0.6040) Friday falling back early this week to 1.6480 (0.6070) as risk and the kiwi is better supported in the wake of the ECB cutting rates from 4.25% to 3.65% late last week. Softer Euro economic data hasn’t helped with German Retail Sales and Eurozone industrial production coming in light. Aussie employment data is the main even this week with no change predicted from the current unemployment rate at 4.2%. The ECB president speaks Friday. Our view is a retest of 0.6080 (1.6450) this week.

Current Level: 1.6485
Resistance: 1.6850
Support: 1.6400
Last Weeks Range: 1.645- 1.6628

The Euro (EUR) hasn’t been able to hold levels around 1.6560 (0.6040) Friday falling back early this week to 1.6480 (0.6070) as risk and the kiwi is better supported in the wake of the ECB cutting rates from 4.25% to 3.65% late last week. Softer Euro economic data hasn’t helped with German Retail Sales and Eurozone industrial production coming in light. Aussie employment data is the main even this week with no change predicted from the current unemployment rate at 4.2%. The ECB president speaks Friday. Our view is a retest of 0.6080 (1.6450) this week.

Current Level: 0.6066
Resistance: 0.6100
Support: 0.5935
Last Weeks Range: 0.6013- 0.6079

GDP for August in the UK came in light last week at 0.0% compared to 0.2% predicted, this sank the British Pound (GBP) to 0.5130 (1.9500) levels before rebounding at the close of the week. Into Tuesday we see prices slipping for the GBP to 0.5110 (1.9570) as markets await this week’s slew of economic releases. We will get a look at UK CPI tomorrow with expectations of a “no change” 2.20% y/y  before the Bank of England (BoE) cash rate comes out. Up until a few days ago we were expecting a 5.0% no change result, however we are not so sure with a 25% chance of the central bank cutting to 4.75%. The uncertainty could weaken the GBP over the week.

Current Level: 1.9573
Resistance: 1.9700
Support: 1.9340
Last Weeks Range: 1.9490- 1.9699

The Euro (EUR) has been unable to hold gains around 0.5550 (1.8015) Monday against the New Zealand Dollar (NZD) retracing to 0.5570 (1.7950) into Tuesday morning trade with risk supporting the kiwi. The European Central Bank (ECB) cut their interest rate from 4.25% to 3.65% as scheduled. Lagarde saying forecast monetary policy is tracking well- incoming data is not suggesting any radical changes to economic forecasting. All eyes will be on NZ GDP q/q with predictions of a poor second quarter at -0.4% following first quarter’s 0.2%. A retest of 0.5585 (1.7900) looks unlikely.

Current Level: 1.7966
Resistance: 1.8020
Support: 1.7830
Last Weeks Range: 1.7896 – 1.8028

The Euro (EUR) has been unable to hold gains around 0.5550 (1.8015) Monday against the New Zealand Dollar (NZD) retracing to 0.5570 (1.7950) into Tuesday morning trade with risk supporting the kiwi. The European Central Bank (ECB) cut their interest rate from 4.25% to 3.65% as scheduled. Lagarde saying forecast monetary policy is tracking well- incoming data is not suggesting any radical changes to economic forecasting. All eyes will be on NZ GDP q/q with predictions of a poor second quarter at -0.4% following first quarter’s 0.2%. A retest of 0.5585 (1.7900) looks unlikely.

Current Level: 0.5566
Support: 0.5550
Resistance: 0.5610
Last week’s range: 0.5546- 0.5587

The New Zealand Dollar (NZD) reached 0.4720 (2.1200) Thursday against the British Pound (GBP) before giving back gains towards the end of the week and into Monday to 0.4680 (2.1360). Chances of a Bank of England (BoE) cut of 25 points have increased over the past few days which could soften moves higher by the GBP. UK Inflation releases first which is forecast to remain at 2.20% y/y. If this comes in light the mood by the B0E could turn reasonably dovish. Good for the kiwi.

Current Level: 2.1321
Resistance: 2.1470
Support: 2.1000
Last Weeks Range: 2.1195- 2.1345

The New Zealand Dollar (NZD) reached 0.4720 (2.1200) Thursday against the British Pound (GBP) before giving back gains towards the end of the week and into Monday to 0.4680 (2.1360). Chances of a Bank of England (BoE) cut of 25 points have increased over the past few days which could soften moves higher by the GBP. UK Inflation releases first which is forecast to remain at 2.20% y/y. If this comes in light the mood by the B0E could turn reasonably dovish. Good for the kiwi.

Current Level: 0.4690
Resistance: 0.4760
Support: 0.4660
Last Weeks Range: 0.4684- 0.4718

NZ GDP q/q and Australian employment data is our focus on the docket this week in the New Zealand Dollar (NZD), Australian Dollar (AUD) cross. The NZD continues to weaken off towards 0.9175 (1.0900) numbers into Tuesday possibly due to speculation that the Reserve Bank of New Zealand could cut rates 50 points In October instead of earlier expectations of 0.25%. Also, of note is a decline in NZ home sales adding to the NZD sell off. With NZ GDP publishing Thursday around -0.4% for the second quarter this should put further pressure on the NZD. Australian jobs data prints Thursday and should be benign, however if the unemployment rates print worse than 4.2% amid cooling inflation this could bring forward rate cut projections and dampen AUD hawks.

Current Level: 1.0892
Resistance: 1.1020
Support: 1.0780
Last Weeks Range: 1.0766 – 1.0894