JPY

The New Zealand Dollar (NZD) continues its bull run higher from the 8 August level of 0.9050 (1.1050) against the Australian Dollar (AUD) reaching 0.9285 (1.0770) into early morning trading. The AUD fells sharply on last week’s disappointing GDP data following a release of 0.2% in the June quarter confirming signs of economic stagnation. The poor growth was largely due to rises in govt funding and tax benefits. Except for covid it’s worth noting that 0.2% growth represents the worse print since quarter 1 in 2011. The RBA now have questions to consider with regards to rising inflation and policy. Chances of no change from the interest rate of 4.35% on the 24th of this month is at 90%. We expect the Aussie to gain on the kiwi this week

Current Level: 0.9223
Resistance: 0.9330
Support: 0.9090
Last Weeks Range: 0.9170 – 0.9263

Risk currencies took a hiding Friday off the back of poor US Jobs data, the New Zealand Dollar (NZD) retracing from 0.6250 levels against the US Dollar (USD) to close out the week around 0.6150. Monday action took the kiwi lower to 0.6120 where it sits early in the Tuesday session. Punters are bracing for this week’s US Inflation report for hints that the US Federal Reserve could cut rates 25 or 50 points at next week’s meeting. Last week’s Non-Farm Payroll report showed unemployment fell from 4.3% to 4.2% paring back odds of a 50-point cut perhaps. Pressure remains to the downside for the NZD this week.

Current Level: 0.6134
Support: 0.6100
Resistance: 0.6200
Last week’s range: 0.6154- 0.6253

The ECB meets again to once again decide interest rate/monetary policy for the Eurozone, this coming week. They may well go ahead and make a further rate cut, as stimulus, and because of the positive reaction to the last rate cut. Inflation remains subdued, following the easing in monetary policy, while the EUR actually rallied. The cross may suffer some downside this time around.

The current interbank midrate is: AUDEUR .6065 EURAUD 1.6485

The interbank range this week has been: AUDEUR .6050 – .6145 EURAUD 1.6290 – 1.6520

The cross rate with the GBP remains fairly stable and this is likely to continue, into the coming week. The UK releases a slew of important economic data this week, including Trade, GDP Growth and Employment. These will be the focus to judge the performance of the British economy, which is showing ‘green-shoots’ of recovery.

The current interbank midrate is: NZDGBP .4725 GBPNZD 2.1165

The interbank range this week has been: NZDGBP .4700 – .4745 GBPNZD 2.1030 – 2.1250

The EUR has performed remarkably well recently, despite rate cuts from the ECB. The ECB meet again this coming week and may well offer further rate cuts, to the markets. This would ordinarily add downward pressure to the EUR, but it appears the added stimulation to a recessionary European economy, offers a balance.

The current interbank midrate is: NZDEUR .5600 EURNZD 1.7860

The interbank range this week has been: NZDEUR .5560 – .5610 EURNZD 1.7713 – 1.7927

The NZD/AUD cross rate has pushed back to 0.9200, supported by continued strong performance of the NZD. The RBA has warned that, ‘interest rates will remain elevated at these high levels for longer to combat stubborn inflation’, lending support to the AUD. The quandary the RBA finds itself in, is economic conditions remain tough in Australia, as GDP growth weakens to levels not seen since the 1990’s. The high interest rates and elevated inflation only add to pressure on the consumer.

The current interbank midrate is: NZDAUD .9220 AUDNZD 1.0820

The interbank range this week has been: NZDAUD .9165 – .9240 AUDNZD 1.0815 – 1.0905

The NZD looks to consolidate above 0.6200, supported by a weaker reserve currency, which was undermined by a weaker than expected US labour market. The major US labour market reports so far this week, Jolts/ADP/Challenger, all point to further weakness in the labour market and threats of recessionary conditions prevailing in the USA. This will add pressure to the Fed, to begin to cut rates, at their upcoming meeting and perhaps by 50 basis points. This will add further support to commodity currencies.

The current interbank midrate is: NZDUSD .6220

The interbank range this week has been: NZDUSD .6130 – .6240

European economic data remains weak, with German GDP growth falling back into negative territory. Manufacturing data out this week, confirms this sector remains in the doldrums, throughout Europe. Energy prices remain at the heart of the problem, which is not likely to change, any time soon. Sanctions continue to take a toll. The cross is likely to weaken back below 0.6100.

Current Level: 1.6273
Resistance: 1.6528
Support: 1.6125
Last Weeks Range: 1.6251- 1.6510

European economic data remains weak, with German GDP growth falling back into negative territory. Manufacturing data out this week, confirms this sector remains in the doldrums, throughout Europe. Energy prices remain at the heart of the problem, which is not likely to change, any time soon. Sanctions continue to take a toll. The cross is likely to weaken back below 0.6100.

Current Level: 0.6125
Resistance: 0.6200
Support: 0.6050
Last Weeks Range: 0.6056- 0.6153

The cross rate with the GBP is trading around 0.5150, but could slip further as interest rate differentials expand and tougher UK budget conditions prevail. The UK Government has promised higher taxes and spending cuts, which does not bode well for the near future. Manufacturing PMI data did show signs of improvement and a stronger economic cycle, could brighten future prospects.

Current Level: 1.9323
Resistance: 1.9600
Support: 1.8867
Last Weeks Range: 1.9308- 1.9535