JPY

The New Zealand Dollar (NZD) reached 0.6050 late in the week against the US Dollar (USD) but has since been in freefall. Reversing gains late Friday, the cross continued its decline to 0.5950 as I write, risk conditions favouring the safe haven greenback amid earlier uncertainty with a US govt shutdown which has been narrowly avoided. It’s a hard lesson on how momentum can shift in a heartbeat. One day buying USD above 0.6000 the next well below these levels. However, we will need to see a break past 0.5930 to signal an exit from the bull trend in play now. Wednesday’s RBNZ cash rate release and policy statement may give clues as to future policy. It’s our view that recent interest rate hikes have done enough to filter higher cost impacts through the economy. Cuts are still expected to get underway late in 2024. Key data late in the week comes in the form of Non-Farm Payrolls

Current Level: 0.5942
Resistance: 0.6100
Support: 0.5850
Last Weeks Range: 0.5898 – 0.6048

Market Overview

Key Points:

• The US has narrowly avoided its 22nd shutdown in 50 years after Republicans and the Democrats agreed to pass a last-minute spending plan. The new deadline is 17 November – if no deal is struck mass government departments will close.
• Japan’s third quarter Tankan report suggests that businesses are expecting inflation to stay high for some time above 2.0% over the next 5 years.
• New Zealand August Building Permits -6.7% m/m vs -5.4% prior
• ECB’s Vasle- We’re most likely done with rate hikes.
• Chinese Manufacturing worsened in September releasing at 50.6 vs 51.1 expected. The figure is viewed as expansion but overall, the sector is well below a decent pace of growth.
• The New Zealand Dollar (NZD) was the strongest currency over the month of September while the British Pound (GBP) was the worst performer.

The New Zealand Dollar (NZD) recovered off 0.5900 Thursday against the US Dollar (USD) regaining losses to 0.5970. New Zealand business confidence improved in September to 1.5% from August’s -3.7% amid a mixed set of sub-indices. Employment intentions were a positive mover while construction was well down. Overall pressure remains to the downside for the kiwi, a retest of 0.6000 would certainly change our view of big picture momentum. The RBNZ still has a hike to go before April – this is now starting to be priced into the cross. Next week’s RBNZ cash rate announcement and policy may highlight when a hike may eventuate but for now those buying USD – fill ya boots.

The current interbank midrate is: NZDUSD 0.5963

The interbank range this week has been: NZDUSD 0.5899- 0.5974

Mid-week action saw the New Zealand Dollar (NZD) extend its run against the Australian Dollar (AUD), the cross reaching 0.9325 (1.0725) before pulling back hard in overnight markets breaking past 0.9295 (1.0760) bull channel support on its way to clock 0.9276 (1.0780) as I write. We aren’t convinced the Aussie support will dominate into the weekly close, if we see the AUD outperform it may be limited to the 0.9260 (1.0800) zone. Both the RBA and RBNZ meet next week, both are predicted to leave rates on hold and possibly signal when their last interest rate hikes will take place.

The current interbank midrate is: NZDAUD 0.9277    AUDNZD 1.0776

The interbank range this week has been: NZDAUD 0.9250- 0.9328    AUDNZD 1.0720- 1.0810

The long-term bull trend from early August in the Australian Dollar (AUD), Euro (EUR) cross continued Monday with price hovering around the two-week lows at 0.6070 (1.6480). Higher lows followed by higher high’s has been the theme over recent weeks suggesting a retest of 0.6030 (1.6585) over the week before further upside develops in the pair. Current price at 0.6065 (1.6490) also sits bang on the 50% Fibonacci resistance giving further confirmation of a temporary retrace lower for the Aussie.

Current Level: 1.6496
Resistance: 1.7010
Support: 1.6340
Last Weeks Range: 1.6467 – 1.6650

The long-term bull trend from early August in the Australian Dollar (AUD), Euro (EUR) cross continued Monday with price hovering around the two-week lows at 0.6070 (1.6480). Higher lows followed by higher high’s has been the theme over recent weeks suggesting a retest of 0.6030 (1.6585) over the week before further upside develops in the pair. Current price at 0.6065 (1.6490) also sits bang on the 50% Fibonacci resistance giving further confirmation of a temporary retrace lower for the Aussie.

Current Level: 0.6062
Resistance: 0.6120
Support: 0.5880
Last Weeks Range: 0.6006- 0.6072

The Australian Dollar (AUD) extended the recent move higher against the British Pound (GBP) into the weekly close to 0.5265 (1.9000), this is the 5th week straight we have seen the AUD outperform reversing off 0.5000 (2.000). 0.5265 (1.9000) represents a resistance pivot point for the cross with direction from here uncertain. We wouldn’t be surprised if the AUD reversed towards 0.5170 (1.9350) over the week.

Current Level: 1.9015
Resistance: 1.9900
Support: 1.8605
Last Weeks Range: 1.8969 – 1.9282

The bear trend momentum in the New Zealand Dollar (NZD), Euro (EUR) kicked into another gear Monday deepening the long-term reversal seen in the cross from mid August’s 1.8460 (0.5420) to 1.7755 (0.5630) today. A breakout past 0.5585 (1.7900) looks to have completed on the chart, the signal needed for a new trend supporting the NZD for a run up to 0.5655 (1.7680). We will certainly see over the coming days if our direction hunch is correct, and the kiwi etches out a longer-term base.

Current Level: 1.7771
Resistance: 1.8400
Support: 1.7560
Last Weeks Range: 1.7790 – 1.8081

The bear trend momentum in the New Zealand Dollar (NZD), Euro (EUR) kicked into another gear Monday deepening the long-term reversal seen in the cross from mid August’s 1.8460 (0.5420) to 1.7755 (0.5630) today. A breakout past 0.5585 (1.7900) looks to have completed on the chart, the signal needed for a new trend supporting the NZD for a run up to 0.5655 (1.7680). We will certainly see over the coming days if our direction hunch is correct, and the kiwi etches out a longer-term base.

Current Level: 0.5627
Support: 0.5435
Resistance: 0.5695
Last week’s range: 0.5530 – 0.5621

Apart from a small uptick early Monday off the open by the English Pound (GBP) to 0.4860 (2.0580), the New Zealand Dollar (NZD) has extended long term momentum reaching 0.4890 (2.0460) into Tuesday. The big picture uptrend from 6 weeks ago cleared resistance at 0.4875 (2.0520) which could imply the kiwi could carve out a longer-term uptrend however a push past 0.4905 (2.0380) could be tough.

Current Level: 2.0479
Resistance: 2.1600
Support: 2.0000
Last Weeks Range: 2.0485- 2.1000