NZD

The NZD/AUD cross rate has pushed back to 0.9200, supported by continued strong performance of the NZD. The RBA has warned that, ‘interest rates will remain elevated at these high levels for longer to combat stubborn inflation’, lending support to the AUD. The quandary the RBA finds itself in, is economic conditions remain tough in Australia, as GDP growth weakens to levels not seen since the 1990’s. The high interest rates and elevated inflation only add to pressure on the consumer.

The current interbank midrate is: NZDAUD .9220 AUDNZD 1.0820

The interbank range this week has been: NZDAUD .9165 – .9240 AUDNZD 1.0815 – 1.0905

The NZD looks to consolidate above 0.6200, supported by a weaker reserve currency, which was undermined by a weaker than expected US labour market. The major US labour market reports so far this week, Jolts/ADP/Challenger, all point to further weakness in the labour market and threats of recessionary conditions prevailing in the USA. This will add pressure to the Fed, to begin to cut rates, at their upcoming meeting and perhaps by 50 basis points. This will add further support to commodity currencies.

The current interbank midrate is: NZDUSD .6220

The interbank range this week has been: NZDUSD .6130 – .6240

European economic data remains weak, with German GDP growth falling back into negative territory. Manufacturing data out this week, confirms this sector remains in the doldrums, throughout Europe. Energy prices remain at the heart of the problem, which is not likely to change, any time soon. Sanctions continue to take a toll. The cross is likely to weaken back below 0.6100.

Current Level: 1.6273
Resistance: 1.6528
Support: 1.6125
Last Weeks Range: 1.6251- 1.6510

European economic data remains weak, with German GDP growth falling back into negative territory. Manufacturing data out this week, confirms this sector remains in the doldrums, throughout Europe. Energy prices remain at the heart of the problem, which is not likely to change, any time soon. Sanctions continue to take a toll. The cross is likely to weaken back below 0.6100.

Current Level: 0.6125
Resistance: 0.6200
Support: 0.6050
Last Weeks Range: 0.6056- 0.6153

The cross rate with the GBP is trading around 0.5150, but could slip further as interest rate differentials expand and tougher UK budget conditions prevail. The UK Government has promised higher taxes and spending cuts, which does not bode well for the near future. Manufacturing PMI data did show signs of improvement and a stronger economic cycle, could brighten future prospects.

Current Level: 1.9323
Resistance: 1.9600
Support: 1.8867
Last Weeks Range: 1.9308- 1.9535

The EUR has remained fairly static, considering the downside bias of interest rates from the ECB. The cross rate has settled just above 0.5600 against the NZD and looks set to remain steady, as both Central Banks maintain a similarly dovish monetary policy. Look for growth and trade data out of Europe to make incremental changes in the cross rate.

Current Level: 1.7736
Resistance: 1.8181
Support: 1.7240
Last Weeks Range: 1.7647 – 1.8019

The EUR has remained fairly static, considering the downside bias of interest rates from the ECB. The cross rate has settled just above 0.5600 against the NZD and looks set to remain steady, as both Central Banks maintain a similarly dovish monetary policy. Look for growth and trade data out of Europe to make incremental changes in the cross rate.

Current Level: 0.5620
Support: 0.5500
Resistance: 0.5800
Last week’s range: 0.5550- 0.5665

The GBP cross rate trades around 0.4750, as the Bank of England and the RBNZ appear to be in lock-step, as far as interest rates are concerned. The UK has seen economic conditions improve, in recent times, to welcome the new Government. The Labour Government have condemned the dire fiscal position of the Country and promised cuts and tax rises. These will not be popular and will surely not encourage economic growth. This may lead to some downside in the cross rate.

Current Level: 2.1097
Resistance: 2.1750
Support: 2.0800
Last Weeks Range: 2.0978- 2.1277

The GBP cross rate trades around 0.4750, as the Bank of England and the RBNZ appear to be in lock-step, as far as interest rates are concerned. The UK has seen economic conditions improve, in recent times, to welcome the new Government. The Labour Government have condemned the dire fiscal position of the Country and promised cuts and tax rises. These will not be popular and will surely not encourage economic growth. This may lead to some downside in the cross rate.

Current Level: 0.4730
Resistance: 0.4800
Support: 0.4600
Last Weeks Range: 0.4699- 0.4767

The recovery in the NZD/AUD cross rate has surprised many, considering the positions of the respective Central Banks. The RBNZ has already began to cut interest rates, with more to come, while the RBA has promised to keep rates at elevated levels, to combat stubborn inflation. This should widen interest rate differentials, pushing the cross lower, but the strong NZ economic data has defied logic. The cross reached 0.9250, but has slipped back to trade towards 0.9150, which is more in line with expectations.

Current Level: 1.0890
Resistance: 1.1000
Support: 1.0800
Last Weeks Range: 1.0796 – 1.0920