JPY

In a light week of economic data, the English Pound (GBP) for the second week running dropped back slightly against the New Zealand Dollar (NZD) opening the week around 0.4725 (2.1160). This week’s only data is the monetary policy hearing minutes Thursday. Global risk sentiment should dictate the week’s moves, we suspect the Pound may recover recent losses especially if markets remain “risk off”. Buying GBP currently north of 0.4700 (2.1276) looks decent given prices 2 weeks ago were well below this level.

Current Level: 0.4698
Resistance: 0.4830
Support: 0.4630
Last Weeks Range: 0.4675 – 0.4733

RBA later today will be about the tone and not the release with the cash rate widely expected to remain unchanged at 4.10% for now. The New Zealand Dollar (NZD) recovered losses late in the week to 0.9225 (1.0840) but hasn’t been able to hold here falling away into Tuesday to 0.9190 (1.0880) as markets position for RBA. With price below multiple moving averages we expect the NZD/AUD momentum to edge lower into the weekly close.

Current Level: 1.0865
Resistance: 1.0930
Support: 1.0750
Last Weeks Range: 1.0832 – 1.0895

RBA later today will be about the tone and not the release with the cash rate widely expected to remain unchanged at 4.10% for now. The New Zealand Dollar (NZD) recovered losses late in the week to 0.9225 (1.0840) but hasn’t been able to hold here falling away into Tuesday to 0.9190 (1.0880) as markets position for RBA. With price below multiple moving averages we expect the NZD/AUD momentum to edge lower into the weekly close.

Current Level: 0.9192
Resistance: 0.9300
Support: 0.9150
Last Weeks Range: 0.9178 – 0.9231

Rising bond yields and slowing global growth have created fragile sentiment of late, the New Zealand Dollar (NZD) coping the full brunt of this. The kiwi looked good on Friday against the US Dollar (USD) clocking early 0.60’s but stalled, falling back sharply into the close to 0.5940 as risk currencies were sold and equity markets went red. The yearly low at 0.5885 is close, below here and we could see much deeper losses in the NZD. On the docket this week is US ISM PMI data, a leading indicator of economic health.

Current Level: 0.5935
Resistance: 0.6100
Support: 0.5880
Last Weeks Range: 0.5885 – 0.6014

German inflation remains stubbornly high, despite flagging economic activity, in the economy. Germany is in danger of a potential de-industrialisation, which can only harm the Eurozone, as a whole. The ECB has acted conservatively in their interest rate policy, but they may be forced to act ‘further and longer’ with rate rises. Inflation had been falling steadily in many EU Countries, but those precipitous falls, appear to have been arrested, with inflation rises in Germany, France and elsewhere in the Zone. The cross rate is likely to suffer accordingly.

Current Level: .5975
Support: .5925
Resistance: .6010
Last week’s range: .5955 – .5995

The ECB Chair, LeGarde, warned of continued inflationary pressures and further rate rises at the Jackson Hole Symposium. The floundering economic situation in the Eurozone remains dire, especially in the ‘engine-room’, that was Germany. German Industrial/Manufacturing Production has been under severe pressure, from extremely elevated energy costs, with warnings that Government subsidies may be coming to an end. Flagging global demand for exports and a precipitous collapse in imports, are revealing a possible structural crisis. The prospects of further interest rate rise, supporting the EUR and the cross rate, will probably mean more downward pressures.

Current Level: .5501
Support: .5420
Resistance: .5525
Last week’s range: .5455 – .5510

Market Overview:

Key Points:

• Non-Farm Payrolls
• EU/US Inflation
• China/German/US/Australia/US Trade Data
• RBA/Bank of Canada Rate Decisions
• Jackson Hole Symposium/BRICS Summit

The Australian Dollar (AUD) held firm around the 0.6425 area post the open against the USD Dollar (USD) Monday as equity markets traded positive. It’s hard to know if we will see a reversal of sorts this week and a push higher, but with improved sentiment in China after an improved May manufacturing PMI read who knows. Australian Retail Sales came in hot at 0.5% in July after a poor June release surprising analysts as shoppers came out during the FIFA Women’s World Cup. Despite this the RBA is still likely to raise rates at the September 5 meeting. Looking ahead we have US Non-Farm Payroll Friday which will add volatility to the mix.

Current Level: 0.6432
Resistance: 0.6365
Support: 0.6500
Last Weeks Range: 0.6385 – 0.6488

No real moves early this week in the Euro (EUR), Australian Dollar (AUD) pair has price sitting around the 0.5940 (1.6830) area as we head into Tuesday. Aussie Retail Sales surprised with a 0.5% rise in July up on expectations of 0.2% and well above June’s -0.8%. A combination of dining out and the Women’s world cup football tournament impacting. The AUD may retest last week’s high of 0.5970 (1.6750) this week as Chinese pessimism improves and if equities remain buoyant.

Current Level: 1.6846
Resistance: 1.7065
Support: 1.6275
Last Weeks Range: 1.6751 – 1.7037