NZD

The European economy is in recessionary territory, with the added pressures of resurgent inflation. Inflation and bond yields had been collapsing in Europe, towards the latter part of 2023, with a combination of tumbling inflation and recessionary economic conditions. A resurgent inflation will ensure tight monetary conditions remain in place for an extended period. This will support the EUR (although ensure recessionary conditions remain). Similar pressures exist in the Australian economy so the cross rate will not move dramatically.

Current Level: 0.6020
Resistance: 0.6150
Support: 0.6000
Last Weeks Range: 0.6020 – 0.6100

The surge in UK inflation, rising back to 4% this week, will ensure the Bank of England remains hawkish in their monetary policy, for the early part of 2024. This will support the GBP and add to the weaker economic conditions, domestically. The interest rate differential may support a stronger pound although RBA actions may dimmish the differential.

Current Level: 1.9398
Resistance: 1.9047
Support: 1.9417
Last Weeks Range: 1.9011 – 1.9398

European economies are suffering recessionary economic conditions and a resurgence in inflation, dimming the likelihood of interest rate cuts in 2024 and adding to tight monetary conditions. The tight money conditions have supported the EUR, although weaker trade and growth do not auger well for 2024.

Current Level: 1.7889
Resistance: 1.7699
Support: 1.7921
Last Weeks Range: 1.7637 – 1.7899

European economies are suffering recessionary economic conditions and a resurgence in inflation, dimming the likelihood of interest rate cuts in 2024 and adding to tight monetary conditions. The tight money conditions have supported the EUR, although weaker trade and growth do not auger well for 2024.

Current Level: 0.5590
Support: 0.5580
Resistance: 0.5650
Last week’s range: 0.5590 – 0.5670

The GBP has been supported by a hawkish Bank of England monetary policy for much of 2023, but had signalled a more neutral 2024. The rebound in inflation in the UK in early 2024, will only serve to reinforce the Central Banks tight policy and add support for the Pound. The cross rate is likely to have a downward bias on the short term.

Current Level: 2.0920
Resistance: 2.0618
Support: 2.1052
Last Weeks Range: 2.0618- 2.0920

The GBP has been supported by a hawkish Bank of England monetary policy for much of 2023, but had signalled a more neutral 2024. The rebound in inflation in the UK in early 2024, will only serve to reinforce the Central Banks tight policy and add support for the Pound. The cross rate is likely to have a downward bias on the short term.

Current Level: 0.4780
Resistance: 0.4850
Support: 0.4750
Last Weeks Range: 0.4780 – 0.4850

The NZD has been under pressure but has managed to post gains on the AUD, as the commodity dependent currency has suffered even more severely, from international demand and supply issues. Falling demand from a recessionary Europe has impacted Australian commodity demand directly, and indirectly, through flow on from flagging industrial production in China. The cross rate NZD/AUD, has rallied to back above 0.9300, but this is likely to range trade between 0.9200 and 0.9400.

Current Level: 1.0710
Resistance: 1.0800
Support: 1.0630
Last Weeks Range: 1.0650 – 1.0790

The NZD has been under pressure but has managed to post gains on the AUD, as the commodity dependent currency has suffered even more severely, from international demand and supply issues. Falling demand from a recessionary Europe has impacted Australian commodity demand directly, and indirectly, through flow on from flagging industrial production in China. The cross rate NZD/AUD, has rallied to back above 0.9300, but this is likely to range trade between 0.9200 and 0.9400.

Current Level: 0.9250
Resistance: 0.9350
Support: 0.9230
Last Weeks Range: 0.9230 – 0.9350

NZ Business Confidence gapped, from minus 52 at the end of Q4 2023, to only minus 2. This was a massive rebound and is a confirmation that business is positive regarding the new Government policies, so far. Resurgent inflation in Europe and the US has pushed bond yields higher and enabled the US Dollar to rebound, pushing the NZD back to below 0.6100. Further inflationary pressures and the supply problems continuing to escalate in the Middle East, will ensure further downside pressures.

Current level: 0.6080
Support: 0.6060
Resistance: 0.6130
Last week’s range: 0.6080-0.6230

The November/December bull trend in the Euro (EUR), Australian Dollar (AUD) ended in late December bouncing hard off 0.6200 (1.6140), with the Euro making gains back to 0.6080 (1.6450). The Euro received a boost from ECB’s Lane who said interest rates were not something of consideration in the short term. Germany, the European powerhouse, is likely to take some time to return to decent growth after succumbing to general economic weakness in 2023. The economy contracted 0.3% in the fourth quarter with weak industrial production and Retails Sales reports. Aussie jobs data releases Thursday on the docket, we expect the unemployment rate to remain at 3.9%.

Current Level: 1.6452
Resistance: 1.6800
Support: 1.6140
Last Weeks Range: 1.6260 – 1.6459