JPY

The New Zealand Dollar (NZD) started the week as it closed, extending price to 0.9200 (1.0870) against the Australian Dollar (AUD). The chart confirms we are sitting at the top of the bear channel. A break above 0.9220 could confirm further support for the kiwi, we predict a retrace to the lower band at 0.9160 (1.0920). On the docket this week is the RBA minutes from the last monetary policy meeting on the 5th of September, the RBA reinforcing recent rhetoric around rates remaining high for extended periods but reserve the right to hike if data reflects. Lowering rates in 2024 are still on the cards. Later in the week is NZ second quarter GDP- predicted to release around 0.4% bringing the country out of a technical recession.

Current Level: 0.9187
Resistance: 0.9300
Support: 0.9150
Last Weeks Range: 0.9160 – 0.9248

Profit taking of US Dollar (USD) long positions has pushed up the New Zealand Dollar (NZD) slightly off Monday’s open to 0.5920 as the week gets underway. The kiwi has been stable over the last week and a bit as equity markets assist. The Federal Central Bank is expected to leave interest rates on hold at 5.50% this week with eyes on the Fed’s “dot plot” forecasting which may or not confirm another hike by year’s end. If we see projections for rate cuts in 2024 this may reverse some of the September gains the USD has made, remember the greenback has been the strongest currency since early August. For now, the big dollar is still in charge, but things could change in a wink.

Current Level: 0.5916
Resistance: 0.6380
Support: 0.5850
Last Weeks Range: 0.5878 – 0.5942

Market Overview

• New Zealand is predicted to formally come out of its 2-quarter recession this Thursday when forecasts for a 0.4% number are released for the second quarter 2023. First quarter 2023 was -0.1%
• ECB doesn’t rule out further rate hikes.
• Australian inflation predictions are back below levels prior to the start of the Ukraine war, however rising gasoline prices have the capacity to impact heavily.
• The Fed will hold rates this week amid easing inflation and a softening labour market, however the Federal Reserve faces 3 issues going forward which could derail their expectations of a spongy landing. The Fed holds rates too long before cutting, energy prices rise, and economic growth takes off again.
• New Zealand Services sector (a survey of business conditions) has fallen again in August- the third straight month with the index at 47.1 down 0.9 points from July, the lowest level since January 2022 confirming little hope of recovery.
• The English Pound (GBP) has been the strongest currency in 2023 with the Japanese Yen (JPY) the worst performer.

The New Zealand Dollar (NZD) has held up around 0.5900 levels most of the week against the US Dollar (USD) in volatile trading. US Inflation is back in causing the Fed problems, rising in the August month by 0.6% and shifting the year-on-year figure from 3.6% to 3.7%, the second rise in a row. The Fed raised rates to a 22 year high in July and the call to raise rates again will largely depend on incoming data, certainly prospects look as though another hike in the fourth quarter may be required. Next week’s Fed meeting is widely predicted to hold at 5.5%. The pair may be losing momentum to the topside analysing the long-term bear channel on the chart. Those needing USD should consider.

The current interbank midrate is: NZDUSD 0.5904

The interbank range this week has been: NZDUSD 0.5879- 0.5945

The Australian Dollar (AUD) has outperformed the New Zealand Dollar (NZD) over the week with price reaching 0.9175 (1.0900) from early week’s 0.9260 (1.0800) area. Aussie job numbers boosted the AUD after publishing up on expectations. The Unemployment rate remains the same at 3.7% but the participation rate rose from 66% to 67% along with the change in the number of fresh folks employed up 64,000 after 25,000 was expected. Next week’s second quarter GDP will publish, expected to print around the -0.1% area confirming the NZ economy is still in a shallow recession. We see decent support around 0.9160 (1.0920) as the cross resumes the 7-week bear trend from 0.9320 (1.0730)

The current interbank midrate is: NZDAUD 0.9175    AUDNZD 1.0890

The interbank range this week has been: NZDAUD 0.9175- 0.9241    AUDNZD 1.0821- 1.0899

The Australian Dollar (AUD) clocked a fresh 6 week high of 0.6007 (1.6645) against the Euro (EUR) but couldn’t hold here dropping back to 0.5980 (1.6715), clearly the cross is not ready to make a move above the key 0.6000 level just yet. Chances of the ECB raising rates this Thursday from the current 4.25% have eased to around 40% from mid August’s 60%. We see chances of a hike in the 4th quarter at 70% depending on how CPI prints. Expectations are for decent drops in both September and October. Direction this week in the cross will mostly come from the ECB.

Current Level: 0.5981
Resistance: 0.6110
Support: 0.5860
Last Weeks Range: 0.5919- 0.6006

The Australian Dollar (AUD) clocked a fresh 6 week high of 0.6007 (1.6645) against the Euro (EUR) but couldn’t hold here dropping back to 0.5980 (1.6715), clearly the cross is not ready to make a move above the key 0.6000 level just yet. Chances of the ECB raising rates this Thursday from the current 4.25% have eased to around 40% from mid August’s 60%. We see chances of a hike in the 4th quarter at 70% depending on how CPI prints. Expectations are for decent drops in both September and October. Direction this week in the cross will mostly come from the ECB.

Current Level: 1.6719
Resistance: 1.7065
Support: 1.6305
Last Weeks Range: 1.6649 – 1.6893

The Australian Dollar (AUD) extended its move higher Monday to 0.5150 (1.9415) vs the British Pound (GBP) easing to 0.5142 (1.945) this morning. Notably the cross has broken the 0.5140 (1.9460) level which could signal further upside for the AUD as the week progresses. UK GDP for July prints this week which could weaken the GBP if we see the forecasted -0.2% reported. Certainly, around these levels buyers of GBP should consider. The long-term trend lower could resume any day.

Current Level: 1.9462
Resistance: 2.1600
Support: 2.0680
Last Weeks Range: 1.9465 – 1.9746

Prices in the New Zealand Dollar (NZD), Euro (EUR) cross reached 0.5530 (1.8080) resistance Monday before easing lower to 0.5510 (1.8155) early Tuesday. This week’s ECB rate decision is hanging in the balance with no clear indication the central bank will hike or not. Chances look to be around 40% for a hike from 4.25%. Certainly, if we see no hike eventuate attention will divert to rhetoric round policy agenda looking forward. We suspect a hike is still very much on the cards this year depending on how inflation rolls out. The enormous bear trend in play from December’s 0.6115 (1.6350) is still very much in play but with the pair showing prices at the bottom of the channel- these levels could represent decent buying of EUR.

Current Level: 1.8178
Resistance: 1.8470
Support: 1.7700
Last Weeks Range: 1.8097 – 1.8317

Prices in the New Zealand Dollar (NZD), Euro (EUR) cross reached 0.5530 (1.8080) resistance Monday before easing lower to 0.5510 (1.8155) early Tuesday. This week’s ECB rate decision is hanging in the balance with no clear indication the central bank will hike or not. Chances look to be around 40% for a hike from 4.25%. Certainly, if we see no hike eventuate attention will divert to rhetoric round policy agenda looking forward. We suspect a hike is still very much on the cards this year depending on how inflation rolls out. The enormous bear trend in play from December’s 0.6115 (1.6350) is still very much in play but with the pair showing prices at the bottom of the channel- these levels could represent decent buying of EUR.

Current Level: 0.5501
Support: 0.5410
Resistance: 0.5650
Last week’s range: 0.5459 – 0.5525