JPY

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

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: 0.9170
Resistance: 0.9275
Support: 0.9075
Last Weeks Range: 0.9179 – 0.9288

The New Zealand Dollar (NZD) ticked lower to end the week around 0.6150 against the US Dollar (USD) perhaps the decline in NZ home sales may have dragged down the kiwi. Into Tuesday morning things are looking better for risk currencies with the NZD making back earlier losses to the 0.6200 level. Odds of a bigger cut to the OCR have increased to around 50% of a 50-point drop in October, we expect to see the NZD capped around the 0.6230 this week. We have a lot of economic releases over the week including The Fed interest rate release predicted to dip from 5.50% to 5.25%.

Current Level: 0.6195
Support: 0.6120
Resistance: 0.6240
Last week’s range: 0.6105- 0.6192

The Australian Dollar (AUD) dropped to 0.6020 (1.6620) Friday against the Euro (EUR) after succumbing to a risk off market tone in the wake of global recession risks. It has bounced back Monday to 0.6040 (1.6560) and should improve if commodity markets correct higher over the week. The European Central Bank (ECB) announce their cash rate Friday night and are widely predicted to drop their interest rate from 4.25% to 3.65% or 50 points following their 25-point cut in June. Eurozone inflation is certainly improving, cooling from 2.6% in July to 2.2% in August. We fancy a retest of support at the 0.6100 (1.6400) level.

Current Level: 1.6586
Resistance: 1.6700
Support: 1.6450
Last Weeks Range: 1.6281- 1.6626