NZD

After a decent week of improvement for the New Zealand Dollar (NZD) with price extending to 0.4825 (2.0720) late in the week the kiwi has given back most of this move against the British Pound (GBP) to drop back to 0.4790 (2.0870) this morning. NZ’s latest survey of inflation expectations showed a continued moderation in the 2-year forecast which dropped from 2.5% to 2.33% along with the 1 year forecast from 3.22% to 2.73%. This should give relief to the RBNZ as no further hikes should be needed. UK Claimant change should reflect a rise of around 14,000 people to the unemployment numbers in April a rising trend following recent months of numbers looking for work. A retest of 0.4780 (2.0930) this week is our pick.

Current Level: 0.4789
Resistance: 0.4825
Support: 0.4735
Last Weeks Range: 0.4779- 0.4825

The New Zealand Dollar (NZD) declined off the weekly open to 0.9100 (1.0990) against the Australian Dollar (AUD) but turned bid Tuesday clawing back losses to 0.9115 (1.0970)- perhaps off the back off mixed Chinese inflation data- prices rose in the month of April with the y/y number printing at 0.3% vs 0.1% in March. Of note this morning NZ Card Retail Sales declined -0.4% in April and net migration lost 52,500 people in the year ending March 2024 won’t bode well for the kiwi. Australian unemployment prints Thursday with expectations of a rise to 3.9%, this will be priced into the RBA rate cut curve and more particularly the NZD/AUD if the number comes in benign. We expect a retest of 0.9100 (1.0985) over the next day or so.

Current Level: 1.0973
Resistance: 1.1025
Support: 1.0950
Last Weeks Range: 1.0948- 1.1029

The New Zealand Dollar (NZD) declined off the weekly open to 0.9100 (1.0990) against the Australian Dollar (AUD) but turned bid Tuesday clawing back losses to 0.9115 (1.0970)- perhaps off the back off mixed Chinese inflation data- prices rose in the month of April with the y/y number printing at 0.3% vs 0.1% in March. Of note this morning NZ Card Retail Sales declined -0.4% in April and net migration lost 52,500 people in the year ending March 2024 won’t bode well for the kiwi. Australian unemployment prints Thursday with expectations of a rise to 3.9%, this will be priced into the RBA rate cut curve and more particularly the NZD/AUD if the number comes in benign. We expect a retest of 0.9100 (1.0985) over the next day or so.

Current Level: 0.9105
Resistance: 0.9135
Support: 0.9070
Last Weeks Range: 0.9067- 0.9134

The New Zealand Dollar (NZD), US Dollar (USD) had a quiet finish to the week closing around 0.6015 and has travelled into Tuesday around similar levels. Yesterday’s NZ 2-year  inflation expectations printed at 2.33% down from 2.5% with the 5-year expectation remaining at 2.25%. Unemployment is predicted to rise to 4.9 in 1 year and drop to around 4.79% in two years. All eyes are on Thursday’s US inflation y/y read with the number expected to dip from 3.5% to 3.4%. US presidential elections start in early November, we expect the Fed to have started their rate cutting before then. We predict the kiwi to test the 0.6100 area over the week.

Current Level: 0.6012
Support: 0.5880
Resistance: 0.6060
Last week’s range: 0.5979- 0.6039

The Bank of England (BoE) Kept interest rates on hold overnight at 5.25% as expected with the bank suggesting they may start cuts in August with a weak outlook for growth as projections the economy will only grow just 0.8% in 2024. Inflation is expected to fall to their 2.0% target point over the coming months but may be a rocky road with energy price effects before settling around the 2.0% late in 2025. Agreement over 5.25% wasn’t a given with 2 members wanting to drop rates 25 points to 5.0%, the vote 2-7 in favour of a hold. Prices in the New Zealand Dollar (NZD), British Pound (GBP) extended higher to 0.4820 (2.0750) this morning a fresh 8 week high in the cross. Of note; price sits bang on the 61.8% fib level suggesting we could see a move today back to 0.4800 (2.0830)

The current interbank midrate is: NZDGBP 0.4819 GBPNZD 2.0751

The interbank range this week has been: NZDGBP 0.4779- 0.4825 GBPNZD 2.0723- 2.0922

Tuesday’s RBA interest rate remained unchanged at 4.35% with the RBA a little less hawkish than we were expecting. Prices in the Australian Dollar (AUD), New Zealand Dollar (NZD) ticked higher from 0.9075 (1.1020) to reach 0.9132 (1.0950) early Friday. The RBA will leave interest rates on hold until at least year end with inflation forecasted to be around 2.8% late 2025. If we compare this to NZ inflation forecast which are falling faster its clear to see divergence starting to affect the NZD/AUD. We will get a closer look next week at NZ Inflation Expectations q/q. We are not convinced just yet we have seen the low at 0.9065 (1.1030) in the rear-view mirror, certainly if price breaks 0.9140 (1.0940) we could see further rises for the kiwi.

The current interbank midrate is: NZDAUD 0.9121 AUDNZD 1.0959

The interbank range this week has been: NZDAUD 0.9067- 0.9134 AUDNZD 1.0947- 1.1029

The New Zealand Dollar (NZD) eased back below 0.6000 to 0.5980 midweek but has recovered against the US Dollar (USD) into early Friday to 0.6035 as risk and equity markets improved. US Core inflation holds the key to the Fed interest rate moves on the horizon, key to keeping interest rate cuts on the table over the next few months CPI will need to shift lower in next week’s report. Currently this is 0.4% with expectations of a read of 0.3%. This will move the yearly inflation number from 3.5% to 3.4%. The cross now eyes last week’s prior top at 0.6046 and past this point the 8-week high of 0.6105. We think with central bank divergence will start to play a bigger part over the next few months, we may have seen the last of the yearly low levels around 0.5850.

The current interbank midrate is: NZDUSD 0.6035

The interbank range this week has been: NZDUSD 0.5980- 0.6039

The Australian Dollar (AUD) held the 0.6155 (1.6250) level Monday after breaking through prior resistance at 0.6135 (1.6300) Friday after risk mood bought back buyers of AUD. At a fresh early January 2024 level, the AUD now targets the yearly open at 0.6185 (1.6170). Monday’s Eurozone PMI read came in higher printing at 53.3 vs 52.9 in April with European Retail Sales due later today with a rebound off March’s -0.5% decline to 0.6% expected.

Current Level: 1.6265
Resistance: 1.6500
Support: 1.6160
Last Weeks Range: 1.6229- 1.6495

The Australian Dollar (AUD) held the 0.6155 (1.6250) level Monday after breaking through prior resistance at 0.6135 (1.6300) Friday after risk mood bought back buyers of AUD. At a fresh early January 2024 level, the AUD now targets the yearly open at 0.6185 (1.6170). Monday’s Eurozone PMI read came in higher printing at 53.3 vs 52.9 in April with European Retail Sales due later today with a rebound off March’s -0.5% decline to 0.6% expected.

Current Level: 0.6148
Resistance: 0.6190
Support: 0.6060
Last Weeks Range: 0.6062- 0.6161

This week’s main attraction is a double header of central bank action with the Bank of England (BoE) and the Reserve Bank of Australia (RBA) both releasing policy statements and cash rates. The Aussie kicked back from 0.5180 (1.9300) mid-week closing around the 0.5275 (1.8960) area extending its run to a 17-week high. Both central banks should retain policy, BoE at 5.25% and the RBA at 4.35%. We see a small chance the RBA could hike to 4.6% but this would be a gutsy move. The BoE could start conversations around cutting sooner than later but will most likely confirm a wait and see approach based on incoming data over the next couple of months. Also of note is monthly UK GDP for March with no improvement from 0.1% expected. We favour a retest of 0.5305 (1.8850) over the week.

Current Level: 1.8971
Resistance: 1.9100
Support: 1.8900
Last Weeks Range: 1.8940- 1.9308