NZD

The Bank of England cut rates at the beginning of August, following the election of the new Labour Government. This was an impediment to the GBP initially, but as other Central Banks cut rates, the cross rate has settled around 0.4685. The Bank of England and the RBNZ are in ‘sync’, in the interest rate cycle, so expect fairly stable cross rates. The provison is inflation and any re-emergence in inflation, may cause a pause in rate cuts.

Current Level: 0.4685
Resistance: 0.4750
Support: 0.4650
Last Weeks Range: 0.4665- 0.4700

The cross-rate reached highs of 0.9450 late in February 2024, before the ‘dovish’ RBNZ statements and their last interest rate decision. The RBNZ surprise rate cut in August sent the cross rate spiralling lower, dipping below 0.9000 at the beginning of August. RBA has shown no signs of rate cuts, but the NZD has made a recovery, to trade back above 0.9150. The interest rate differential may grow, so the cross rate will surely have some downside risk.

Current Level: 1.0946
Resistance: 1.0990
Support: 1.0810
Last Weeks Range: 1.0940 – 1.0970

The cross-rate reached highs of 0.9450 late in February 2024, before the ‘dovish’ RBNZ statements and their last interest rate decision. The RBNZ surprise rate cut in August sent the cross rate spiralling lower, dipping below 0.9000 at the beginning of August. RBA has shown no signs of rate cuts, but the NZD has made a recovery, to trade back above 0.9150. The interest rate differential may grow, so the cross rate will surely have some downside risk.

Current Level: 0.9135
Resistance: 0.9250
Support: 0.9100
Last Weeks Range: 0.9090 – 0.9140

The NZD hit lows for the year of 0.5880 towards the end of July, but dovish Central Banks in Europe and the US changed the differential narrative, allowing the NZD to begin to recover into August. The RBNZ surprised many in August, with a rate cut, and this sent the NZD tumbling lower mid-August. The ECB and Bank of England have led the way, with rate cuts, and the Federal Reserve has announced they will also join the party, in a welcomed speech from Fed Chairman Powell at the Jackson Hole Symposium. It has been gaining ever since, as market sentiment surges and equity markets approach record levels, once again.

Current Level: 0.6220
Support: 0.6200
Resistance: 0.6300
Last week’s range: 0.6125- 0.6225

The New Zealand Dollar (NZD) bull run ended abruptly Wednesday against the US Dollar (USD) as risk markets turned. Equity markets are all off highs as prices in the cross retrace from 0.6175 the early June high to 0.6120 into Friday. The Fed have said they wouldn’t look at rate reductions until they had confidence in “sustainable” inflation towards their 2% target. Also on concern is the weakening jobs market and recession fears. Powell speaks at the Jackson Hole event later today and should confirm a pessimistic view of things to come. Topside moves by the kiwi could be tough with massive resistance at 0.6200.

The current interbank midrate is: NZDUSD 0.6144

The interbank range this week has been: NZDUSD 0.6025- 0.6177

The New Zealand Dollar (NZD) has edged higher over the week through 0.9150 levels into Friday against the Australian Dollar (AUD) reaching 0.9168 (1.0910) last week’s high. As we speculated the midweek Aussie buzz ended with pull backs in equity markets and poor local data leading declines, however with the hawkish RBA stance reiterated in this week’s central bank minutes we should see the AUD improve in the midterm. NZ Retail Sales this morning came in at -1.2% slightly worse than expected, the kiwi unmoved over the release. On the economic docket next week, we have Australian CPI y/y which could tick marginally lower from 3.8%

The current interbank midrate is: NZDAUD 0.9159 AUDNZD 1.0913

The interbank range this week has been: NZDAUD 0.9064- 0.9168 AUDNZD 1.0907- 1.1032

Risk tone supported the New Zealand Dollar (NZD) to late Wednesday’s 0.4730 (2.1145) against the British Pound (GBP) before pulling back to 0.4680 (2.1360) early Friday. NZ Retail Sales came in light at -1.2% for the month of June vs forecasts of -1.0% and down on May’s 0.5%. UK Manufacturing has showed promising signs with the sector expanding in August with an uptick in new orders and activity. This marks the 4th consecutive rise and the fastest pace in over 2 years. Fib setups suggest we could see a retest of the 0.4715 (2.12) area in the coming days.

The current interbank midrate is: NZDGBP 0.4692 GBPNZD 2.1312

The interbank range this week has been: NZDGBP 0.4673- 0.4730 GBPNZD 2.1141- 2.1395

The Australian Dollar (AUD) continues to rally against the Euro (EUR) extending moves 2 straight weeks to 0.6075 (1.6460), a 4% shift off early August levels. Earlier eurozone trade surplus surprised to the topside helping to boost the EUR for a bit before the Aussie retained momentum. On the calendar this week is eurozone manufacturing and the Jackson Hole Symposium which could throw up surprises.

Current Level: 1.6474
Resistance: 1.6700
Support: 1.6200
Last Weeks Range: 1.6522- 1.6747

The Australian Dollar (AUD) continues to rally against the Euro (EUR) extending moves 2 straight weeks to 0.6075 (1.6460), a 4% shift off early August levels. Earlier eurozone trade surplus surprised to the topside helping to boost the EUR for a bit before the Aussie retained momentum. On the calendar this week is eurozone manufacturing and the Jackson Hole Symposium which could throw up surprises.

Current Level: 0.6070
Resistance: 0.6170
Support: 0.5990
Last Weeks Range: 0.5971- 0.6052

The Australian Dollar AUD) finished the week well recovering off 0.5130 (1.9500) area to close at 0.5155 (1.9400) before extending gains Monday to reach 0.5185 (1.9290) as it gathers momentum into Tuesday. Data out in the UK hasn’t been completely convincing of late with GDP for the month of July coming in lower at 0.6% and Retail Sales also disappointing at 0.5% for July. In contrast the RBA has no plans to cut rates with upside risk to inflation while closely correlated commodity prices continue to extend gains. UK Manufacturing is Thursday. 0.5290 (1.8900) is the next target.

Current Level: 1.9305
Resistance: 1.9750
Support: 1.9100
Last Weeks Range: 1.9318- 1.9523