JPY

RBA and Melbourne Cup Day. The RBA is expected to hike interest rates from 4.10% to 4.35% later today after a 4-meeting pause. The New Zealand Dollar (NZD), Australian Dollar (AUD) cross has been bouncing around recent levels circa 0.9215 (1.0850) this week after falling to 0.9140 (1.0940) last week as risk flow benefited the AUD. The RBA efforts are to achieve a 2-3% inflation target by the end of 2025 and today they may signal further hiking if they see it necessary. In other key data is NZ quarterly inflation expectations Wednesday, anything above 2.83% could send the kiwi higher. No 1 is our pick in the Cup at 5.05 NZT

Current Level: 0.9180
Resistance: 0.9245
Support: 0.9140
Last Weeks Range: 0.9139 – 0.9223

The New Zealand Dollar (NZD) rose over 2.5% last week against the US Dollar (USD) clocking 0.6000 as the greenback was heavily sold post US employment data publishing. The number of new people entering the workforce shrank with just 150,000 instead of 178,000 expected and the unemployment rate rose from 3.8% to 3.9%. As we suggested we got plenty of NZD upside ending the week as punters exited the USD, however the cross has stalled in the run up to 0.6000 eased back to 0.5960 into early Tuesday. NZ Inflation expectations print tomorrow but for now we eye today’s Melbourne Cup.

Current Level: 0.5960
Resistance: 0.6040
Support: 0.5800
Last Weeks Range: 0.5787 – 0.6000

Market Overview

• Waves of US Dollar selling continued at the start of the week with demand for risk products following last week’s Non-Farm Payroll release.
• ECB’s Lagarde says she is determined to bring down inflation to 2.0% and suggests this will happen in 2025.
• Ex vice Fed chair Brainard is forecasting to take US recession calls off the table after last week’s “sustainable” jobs data.
• Markets are pricing in a Bank of Canada rate cut as early as next April with end of 2024 inflation expectations at 2.2%
• The conflict in Gaza death toll has exceeded 10,000 with more than 4,000 of these children. Jordan says it is leaving options open after Israel’s failure to separate between civilians and military targets.
• The New Zealand Dollar (NZD) has been the strongest currency this month while the US Dollar (USD) has been the worst performer.

New Zealand Unemployment rose from 3.6% to 3.9%, the highest level in 2 years while wage growth slowed. The New Zealand Dollar (NZD) rising to 0.5915 against the US Dollar (USD) boosted also by a fresh wave of “risk on” and poor US data. The Federal Reserve left rates unchanged at 5.50% from the 22-year high signalling rates would remain high well into 2024 in order to hold inflation under control. Markets look to have priced in a peak of 5.50%. The Fed will never rule out hiking further but for now it’s all about “hot” economic data dependent. US Non-Farm Payroll and US Unemployment releases tonight expect more swings and possible upside in the NZD.

The current interbank midrate is: NZDUSD 0.5891

The interbank range this week has been: NZDUSD 0.5787- 0.5915

New Zealand Unemployment data pushed the New Zealand Dollar (NZD) to 0.9210 against the Australian Dollar (AUD) midweek but it wasn’t able to hold this area falling back to 0.9140 Thursday. The risk rally we have seen over the week has been more Aussie supportive, with decent rallies in commodities and Iron Ore firming above 124.50. Next week’s RBA cash rate will be key to direction either way, the central bank expected to hike 25 points from 4.10% to help rein in inflation currently sitting at 5.6% y/y. Support at 0.9145 may not hold.

The current interbank midrate is: NZDAUD 0.9162 AUDNZD 1.0902

The interbank range this week has been: NZDAUD 0.9139- 0.9231 AUDNZD 1.0842- 1.0941

The Australian Dollar fell through key 0.6000 last week after reaching 0.6040 (1.6555) against the Euro (EUR) on its way to clocking a low of 0.5944 1.6822 as market uncertainty in Gaza hit the wires. This week’s moves in the cross have been benign, trading around 0.6020 (1.6620) areas. ECB’s Muller says a deep recession won’t happen in the Eurozone as inflation is predicted to slow further over the coming months. Inflation is far from the ECB’s target of around 2.0% but recent interest hikes have hit their mark and are having an economic effect. The cross resides in a bull trend but 0.6035 (1.6570) will be hard to breach.

Current Level: 1.6663
Resistance: 1.6850
Support: 1.6590
Last Weeks Range: 1.6557 – 1.6843

The Australian Dollar fell through key 0.6000 last week after reaching 0.6040 (1.6555) against the Euro (EUR) on its way to clocking a low of 0.5944 1.6822 as market uncertainty in Gaza hit the wires. This week’s moves in the cross have been benign, trading around 0.6020 (1.6620) areas. ECB’s Muller says a deep recession won’t happen in the Eurozone as inflation is predicted to slow further over the coming months. Inflation is far from the ECB’s target of around 2.0% but recent interest hikes have hit their mark and are having an economic effect. The cross resides in a bull trend but 0.6035 (1.6570) will be hard to breach.

Current Level: 0.6001
Resistance: 0.6030
Support: 0.5935
Last Weeks Range: 0.5937 – 0.6843

Australian Retail Sales boosted the Australian Dollar (AUD) Monday against the British Pound (GBP), the cross reaching 0.5260 (1.9020). Early Tuesday the Aussie had pulled back to 0.5240 (1.9090) in what could only be described as weird. With momentum in hand to extend the move, possibly to retest a prior low at 0.5300 (1.8870) in our book, it’s gone the other way. With most signals pointing to a hike at the Reserve Bank of Australia’s (RBA) policy meet on 7 November and a hold by the Bank of England (BoE) later this week it’s a little strange for investors and positioning. Adding to the “risk on” tone we also have geopolitical tensions easing in Gaza. We favour a move back to 0.5280 (1.8940) this week.

Current Level: 1.9102
Resistance: 1.9350
Support: 1.8950
Last Weeks Range: 1.9018 – 1.9339

The New Zealand Dollar (NZD) opened the week pretty much at the same place it did a week earlier around 0.5510 (1.8160) albeit a little water under the bridge. We don’t expect too much upside this week for the kiwi after recent weeks of poor performance, the pair still trending lower from the October 10 high of 0.5714 (1.7500) as it targets the April 2020 low at 0.5440 (1.8380). Risk factors have improved over the last few hours as the Gaza ground offensive started, the positive is that fighting is contained within the Gaza strip and has not worsened into a US/Iran war.

Current Level: 1.8178
Resistance: 1.8380
Support: 1.8000
Last Weeks Range: 1.8050 – 1.8263

The New Zealand Dollar (NZD) opened the week pretty much at the same place it did a week earlier around 0.5510 (1.8160) albeit a little water under the bridge. We don’t expect too much upside this week for the kiwi after recent weeks of poor performance, the pair still trending lower from the October 10 high of 0.5714 (1.7500) as it targets the April 2020 low at 0.5440 (1.8380). Risk factors have improved over the last few hours as the Gaza ground offensive started, the positive is that fighting is contained within the Gaza strip and has not worsened into a US/Iran war.

Current Level: 0.5501
Support: 0.5440
Resistance: 0.5555
Last week’s range: 0.5475 – 0.5540